Every fortnight, we hand over the blog to one of the London Shapers, to give you a flavour of what they do, how they think and what's really going on in our hearts and minds. Today’s blog comes from Agastya Muthanna who has spent the last 6 years in sustainability, building businesses that move us towards a greener future.
While the world of politics in the UK has been noisily imploding, the energy sector has been quietly evolving at breakneck speed. I am lucky to be able to part of this acceleration, and being an incurable contrarian, I believe we are moving towards a renewable future much faster than many analysts expect.
Here are the three major reasons why I am optimistic:
1. Contrary to many predictions, renewable energy can support - not just destabilise - the grid
The unpredictable nature of renewables is the core reason why the majority of analysts believe thermal power will continue to be a major part of the energy mix. Their argument sounds compelling: in a high renewable energy world, demand for energy will rarely match supply, e.g., it may be windy during the middle of the night when no one needs any electricity, but still and sunless during the World Cup final when demand is highest. The argument concludes that we need thermal energy operating on the system to provide a variety of services that guarantee stability, flexibility and security.
They may be wrong.
Over the last two years I have been working to see how Offshore Wind Farms (one of the fastest growing renewable generators) can provide many of these services. Offshore Wind Farms are incredible. Each turbine is larger than ‘The Gherkin’ skyscraper in London, and each blade is larger than most commercial airplanes.
These massive machines are packed with advanced, state-of-the-art electronics. Without spilling commercial secrets, I can reveal that several services critical to ensuring the grid system continues to operate can be provided by Offshore Wind. Other renewable providers have similar untapped capabilities.
2. The market for electricity is becoming more sophisticated
As supply and demand vary, prices for electricity swing wildly. Many analysts argue that this will drive renewable energy asset developers and owners out of the market. Electricity markets have never been very exciting for traders; the market for electricity paled in comparison to easier-to-store commodities like oil or even frozen orange juice.
This is changing. Electricity markets are evolving fast.
As the market for electricity ‘futures’ develops, renewable energy developers and operators will no longer need to rely on governments to help stabilise energy prices. In addition, alternative ways for renewable energy asset owners to guarantee prices are mushrooming – corporate power purchase agreements are making headlines around the world, and exciting ways to store excess energy or use cheap energy in new ways are being developed every day.
3. Finally, Renewable energy production is getting cheap, fast
This is not new news; but is happening faster than expected, for a range of new technologies. Here is a simple example: the Orsted offshore wind farm, Hornsea 1, which started producing electricity earlier this year, is guaranteed a price of £140 per MWh.
Hornsea 2, next door, due to start producing in 2022/23 is guaranteed a price of just £57.5 per MWh – comparable to thermal alternatives.
I am excited about these trends, and believe that I can have an impact, not just by trying to ‘predict’ the future, but by putting my neck on the line – and continuing to build projects that help overcome barriers to a transition towards a cleaner energy system.