Technology transitions always happen faster than the conventional market predicts

Technology transitions always happen faster than the conventional market predicts

While recent International Energy Agency predictions for renewables as a part of the world’s future energy outlook remain conservative, Ray Wills, from Australia’s Sustainable Energy Association, argues that technological change happens more quickly than is often predicted.

How quickly can things change? It depends on normal lifecycle replacement of the device, which is generally determined by affordability, but sometimes overwhelmed by desirability. A natural turnover and retirement of appliances – that is when they stop working and must be replaced – can bring a minimum penetration of new smart appliances into countries like Australia by 2021.

Faster rates of replacement occur generally because of consumer sentiment (I want it now), pricing advantage (I want to save money), or policy measures and laws in the case of health or environmental factors (regulations from government designed to stop stuff that’s killing you, or the planet).

However, even when having the devices is driven by health and safety, there are still maximum rates of replacement

. Low rates of take-up of new devices occurs under “nice to have, but will live without for a while” circumstances – for example dishwashers which, believe it or not, have been slow to be adopted at less than two percent per year for the last 50 years.

Strong rates of take up in the order of ten percent per year will mean that most of the population will have adopted a technology within ten years – that was what happened with VCRs and mobile phones.

 Aggressive rates of replacement are around 20 percent per year and can pretty much complete deployment of the whole market in around five years – we have seen it in car safety with airbags, and we’ll probably see it with the transition from incandescent lights to compact fluorescent lights. In Australia, there is legislation enforcing these shifts in technology.

The first point of market development that all products entering a market must achieve, is where the early innovators have bought in and warmly accepted it as a part of what they do each day. In the normal path of market evolution, the innovators are then followed by early adopters, and they lead the rapid commoditization and desirability of owning the new tech gadget that will ultimately contribute to its runaway success and move to market dominance over the course of the next period of time.

What are the implications of rapidly shifting technologies for renewable energy sources, such as photovoltaics? Renewable generation of all forms continue to get cheaper while the price of fossil fuel rises, and governments may finally move to also eliminate global fossil fuel subsidies.

Continuing bad (and sad) news from Fukushima will continue to keep nuclear off most agendas. Meanwhile, solar will be at retail grid parity in most of the world by 2015 at the same time that electric vehicles will be produced in numbers (one Chinese manufacturer BYD is planning to build one million electric vehicles by 2015) in the market place, thus creating low cost storage options that deal with intermittency, storage for peak, and minimizing (not yet eliminating) overnight load supplied from fossil fuel generation by 2025.

How quickly can things change? Let’s look at natural market change not influenced by pressing issues, like climate change. Western Australia is a pretty good example. Thirty years ago, 65 percent of Western Australia’s on-grid electricity generation was coal; now in 2011, 65 percent is gas. This shows we can swap the majority share of any generation in the space of 30 years. It is perfectly logical timeframe, because we generally amortize a plant over 15 years, and might consider retiring generally after 25 to 30 years.

The data show that public announcements of power-plant developments do not arrive as commissioned power plants, with the number commissioned historically significantly less then new capacity announced (see data here). In 2008, the forecast build for coal globally was 64 gigawatts (GW), the actual build in 2010 was 14 GW! The suggestion the world is building coal-fired capactiy is myth based – we are actually building less and less coal-fired capacity, not more and more. That’s not being a greenie, that’s being scientific and looking at the actual data.

There was a period of time between 2006 and 2008 when China was opening a new coal fired power station every 15 days. What never got reported, in the biased coverage of what China is actually doing, was that over the same period they closed 60 percent of their old fleet with thermal efficiencies in the low 20 percent, replaced by the new fleet with thermal efficiencies often in the high 40 percent.

A new Chinese Wind Energy Roadmap, just published by the Chinese Energy Research Institute (ERI), shows a plan to reach an incredible 1,000 GW of wind energy, increasing its share of electricity production to 17 percent in China by 2050. This development is in line with the Chinese government’s low carbon development strategy to add some 20 GW of new wind capacity annually up to 2030, thus bringing total operational capacity to 400 GW by 2030.

My view is that within five years, these plans will be overtaken by the build in solar – at this point China plans to have ten GW of solar by 2015 – which the Chinese Government is supporting with a mandated 15 cent per kilowatt hour commercial feed-in tariff. Chinese targets generally get met early (it’s politically not a good thing to underperform), so data published just this month shows the photovoltaic project pipeline in China grew to 16 GW, will clearly overwhelm the ten GW by 2015.

Did I mention the world built a total of 14 GW of coal last year?

Solar will hit retail grid parity pretty much around the world by 2015, probably faster now that China has announced these plans, and especially since prices for polysilicon have dropped 56 percent this year. 2010 photovoltaic module production capacity increased by 160 percent over 2009, to 21.6 GW, forecast to be 30 GW annual production by 2015.

At the same time as retail grid parity’s arrival, electric vehicles will be being produced in numbers, as aforementioned, thus creating low-cost storage options that deal with intermittency, storage for peak, and minimizing (not yet eliminating) overnight load supplied from fossil fuel generation by 2025.

Some bang on about nuclear – yes, China, in raw numbers, is planning a lot – but the country is comparatively modest in the scale of things: it is planning 70 GW of nuclear by 2020, but 200 GW of renewables, also by 2020! Also, a decision hasn’t been announced over what is being done post-Fukushima, but the analysts expect the country to proceed at a more modest scale. The 12th five-year plan was released post-Fukushima and it was in that that China increased its renewables target on solar from one GW to 10 GW by 2015, but there was no indication if that was opportunistic based on manufacturing capacity, or was influenced at all by concerns on Fukushima.

Thorium is the latest suggestion from those attempting to distract us from renewables as the solution, but according to those in the nuclear research arena, thorium realistically is at least 50 years away from being realized. Nevertheless, I note India talking about building a 300 megawatt (MW) prototype – it’s being played up in some parts of the press – but when you look at the detail, the proponents note, “if all goes to plan, the […] reactor could be operational by the end of the decade”. That’s just a prototype. My view is that by 2025, the game will be over, we will have solved intermittency through storage, and electricity from solar will be cheaper than coal. I don’t believe I’m dreaming, simply looking at technology shifts and the capacity for rapid technology shifts in the past – go back 100 years ago and tell the buggy and whip manufacturers they will soon be out of business and imagine the response.

Australian Senator Barnaby Joyce has been critical of carbon-tax legislation, passed last-week by the Australian Federal Parliament, saying that it will bankrupt the country. If Senator Joyce time shifted to 100 years ago and was put in charge of defending the buggy whip manufacturers – an essential item for the horse drawn carriage line – he would have been saying the reckless shift to the horseless carriage will cost us our jobs and send us broke. The data is showing us otherwise and that technological change, in the right conditions, can move faster than many naysayers think.

Ray Wills has had a wide-ranging career at different times as researcher, academic, planner, consultant, adviser, manager and executive. Ray has substantial expertise in ecology, sustainability, climate change science and the effects of expected future climates on Australia and the world, and is recognised as an authoritative commentator on policy and functional responses to mitigate and adapt to global warming. Ray is Chief Executive of the energy chamber, the Sustainable Energy Association, a business peak body actively supporting action on sustainable energy in all sectors of Australia’s economy in all regions of Australia, and Adjunct Professor with the School of Earth and Environment at the University of Western Australia, and contributing to the academic program and lecturing on the science, economics and politics of environmental change.

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