Energy Security

and the

4th Industrial

Revolution

AMCHAM Manila

21 November 2017

Dan Millison

Manager

Transcendergy, LLC

“All forecasts are wrong… …some are useful.”

- ???

The New Paradigm for Everything including energy

• 1st Industrial Revolution - water & steam power

mechanize production. 2nd - electric power creates mass

production. 3rd - electronics & information technology

automate production.*

• 4th - … a fusion of technologies that is blurring the lines

between the physical, digital, & biological spheres…

characterized by velocity, scope, and systems impact…

evolving at an exponential rather than a linear pace…

disrupting almost every industry in every country. And the

breadth and depth of these changes herald the

transformation of entire systems of production,

management, and governance.*

* Klaus Schwab. 2016. The Fourth Industrial Revolution. Foreign Affairs. Council on Foreign Relations,

New York. Klaus Schwab, How Will the Fourth Industrial Revolution Affect International Security;

10 February 2016; http://www.weforum.org/agenda/2016/02/how-will-the-fourth-industrial-revolution-

affect-international-security

A New Paradigm for Energy & everything else

“Advances in areas such as

nanotechnology and materials science,

smart factories, additive manufacturing,

autonomous cars, gene-editing

techniques, and battery technology stand

to alter life on Earth, not only for individuals

but also for the nations they inhabit.”*

* Matthew Bey, Between Geopolitics and Technology, Geopolitical Weekly, STRATFOR, 27 September 2016; www.stratfor.com

Thomas EdisonSamuel Insull

J.P. MorganNikola Tesla

Alexander Graham Bell

Henry Ford

Multiple Ds

Decarbonization +

Decentralization +

Democratization +

Digitization +

Disintermediation = DISRUPTION

Darwinism:

If you’re not a victor you’re likely a victim.

The 21st Century Electricity System

Digitization + Disintermediation + Decentralization + Decarbonization +

Democratization = Disruption

Generation

Centralized

with increasing

RE penetration

Transmission

Distributed

Generation

Consumers and

Prosumers

Distribution

• Micro-grids

(AC and DC)

• Swarm

electrification

• Peer-to-peer

(P2P)

• Business-to-

business (B2B)

• Machine-to-

machine

(M2M)

• Blockchain

• Crypto-

currency

New business models TechnologiesSub-systems

Storage to ensure spinning

reserves requirements, &

smoothing & time-shifting of

variable RE

• Dynamic Line Ratings (DLR)

• High-temperature Low-sag

(HTLS) conductors

• Storage for frequency & voltage

control

• Digital substations

• Smart transformers

• Automated demand response

• Virtual power plants

• Behind the meter storage

• Smart meters / thermostats

September 2009:

G20 agree to phase out fossil fuel

subsidies… but the agreement was never

implemented.

What’s happened since then?

Clean coal = joke

CCS = bad joke

Clean diesel = the worst joke until

Nuclear renaissance = Hinkley Point C

Frack-mageddon*Gas replacing coal in US US coal displacing Russian

gas in Europe Russian gas to China (May 2014)

* © D. Millison Original term: Development Of Unconventional Gas (DOUG)…

not to be confused with Dumb Old Utility Guys (DOUG © J. Liston)

“Gas boom aside, coal isn’t dead” – Wall Street Journal, 8 January 2014

0

5

10

15

20

25

2011 2014 2016

Peabody

Arch Coal

Alpha Natural

Walter Energy

Market Capitalization US$ Billion

BNEF / Leibriech, 2015

EU Net Capacity Additions 1995-2015 (MW)

-60000

-40000

-20000

0

20000

40000

60000

80000

100000

120000

140000

160000

Win

d

Gas PV

Hyd

ro

Bio

mas

s

CSP

Was

te

Geo

ther

mal

Peat

Oce

an

Nu

clea

r

Co

al

Fuel

Oil

Edison & Insull: baseload + peaking power

Dynamic Energy: forecast & balanceEE + RE + S < C

-200

-150

-100

-50

0

50

100

150

200

250

300

350

Net coal capacity growth in developing Asia by 2030 (GW)

0

100

200

300

400

500

600

700

800

2011 2013 2016 2017

Millison’s Forecasts for Net Coal Fired Growth to 2030 (GW)

2014-24: Decade of Sustainable Energy For All

“We will make electricity so cheap

that only the rich will burn candles.”

-- Thomas Edison ~ 1880s

“There is no reason why we should

not use the roofs of our houses to

install solar apparatus to catch and

store the heat received from the

sun.”

Alexander Graham Bell -- 1914

85000

7650100 72 44 7 7 7 4 3 15

0100002000030000400005000060000700008000090000

Total “raw” Resource (TW)

Source: Abott, 2010

Everything else: 244 TW

SOLAR: 7000+ TW

Special thanks to Sohail Hasnie of ADB for posting on LinkedIn

Solar PV already at or below coal parity

US$0.06 / kWh

US$0.02 / kWh

Solar PV at or below coal parity

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.09

0.1

2014 India2014 Austin TX2015 UAE2016 Zambia2016 Chile

Utility scale solar PV PPAs $/kWh

“new normal” for PPAs worldwide

“Exceptional”

cases

Storage: power rating & discharge duration

BNEF Lithium-ion battery price survey 2010-16 $/kWh

** Coal plants pre-pay for fuel instead of discounting cost over 30 years and

avoiding costs of environmental and social externalities

0

0.5

1

1.5

2

2.5

3

3.5

Apples to apples cost of coal vs solar + storage ($ billion)

Firm solar + Firm wind + demand response + storage

Networked Distributed Storage = Virtual Power Plants

minimal need for spinning reserves

Edison & Insull’s model

of baseload + peaking

power is obsolete

Community owned Solar + Storage

democratization of electricity

A scalable solution for most of the world’s bottom billion

In 1900, electric cars accounted for around a third of all vehicles on the road in the US http://energy.gov/articles/history-electric-car

Henry Ford

Electric Mobility in Developing Asia

Electric Mobility in Developing Asia

Electric Mobility in Developing Asia

Electric Mobility in Developing Asia

0

100

200

300

400

500

600

700

2008 2012 2014 2016 Tipping Point

Li-ion $/kWh

Tesla S – $240/kWh

competitive @ $3/gallon

Tesla 3 –

$190/kWh

competitive

@ $2/gallon

Source: http://www.visualcapitalist.com/explaining-surging-demand-lithium-ion-batteries/

Addressable US Market for Battery Electric Vehicleswith 320 Kilometer Range

Source: Salim Morsy, Bloomberg New Energy Finance, 2016http://www.bloomberg.com/news/articles/2016-02-09/will-the-tesla-model-3-really-sell-for-25-000

Chevy Bolt, Tesla 3

Assumptions: US Market 15,000 miles/year

ICE: 33 mpg, $2/gallon EV: 0.3 kWh/ mile, $0.122/kWh

Annual fuel cost is equal if gasoline is $1.21 / gallon

0

100

200

300

400

500

600

700

800

900

1000

ICE EV

Fuel Cost: ICE vs. EV (US$/year)

EV savings: $360 /year

“Do you like buying gas from these guys?”

The challenge for grid utilities: integrate RE + storage on wheels into the grid, or else....

The 21st Century Electricity System

Digitization + Disintermediation + Decentralization + Decarbonization +

Democratization = Disruption

Generation

Centralized

with increasing

RE penetration

Transmission

Distributed

Generation

Consumers and

Prosumers

Distribution

• Micro-grids

(AC and DC)

• Swarm

electrification

• Peer-to-peer

(P2P)

• Business-to-

business (B2B)

• Machine-to-

machine

(M2M)

• Blockchain

• Crypto-

currency

New business models TechnologiesSub-systems

Storage to ensure spinning

reserves requirements, &

smoothing & time-shifting of

variable RE

• Dynamic Line Ratings (DLR)

• High-temperature Low-sag

(HTLS) conductors

• Storage for frequency & voltage

control

• Digital substations

• Smart transformers

• Automated demand response

• Virtual power plants

• Behind the meter storage

• Smart meters / thermostats

Transcendergy, L.L.Csolutions for a sustainable future

Thank you!

danmillison@gmail.com