David Boyle

Creative destruction in the energy market

Town & Country Planning, October 2013


Something very strange is happening in the world of energy.  In fact, it is so strange that I think it may prove historic. It is a sign that renewables will not be the Cinderella of the energy sources for much longer, but will increasingly come to disrupt business models – and change the places we live in too.

What has happened is that solar power has begun to split the ultra-conservative Tea Party in the USA.

Many of them still adhere to the old attitudes, thanks to funding from oil interests and the notorious Koch Brothers, that renewable energy is somehow related to the Abomination of Desolation.  But there are others, notably in Georgia, who see things rather differently.

Decentralised energy generation, as far as they are concerned, makes them at least partly independent of the big energy providers, and independence, as far as the Tea Party mindset is concerned, is the real bottom line.

“Let's make sure that before anyone paints me as some San Franciscan, solar-company-running, ultra-left-wing-fruitcake, please know that I am assuredly not,” said the founder of the US solar company One Block Off The Grid, quoted in the Guardian over the summer.  It is a peculiar gulf to cross.

But the latest figures for solar energy bears out the fact that the gulf is being crossed.

An associate professor at the University of New South Wales has published research showing that the old gas and coal-fired power stations will not be able to compete with renewables in

future, even if carbon capture and storage (CCS) technology becomes commercially viable (Professor Mark Diesenberg and colleagues from UNSW's Institute of Environmental Studies)

Perhaps, that goes hand in hand with the decision by Ikea to sell solar panels in all their stores.  I don’t know, but something is in the air (as they say).

Let’s be clear about this.  This is not quite the shift that we have discussed for years, which represents the painful shift from fossil fuel to renewables – though that is important for other reasons.  What makes it so powerful potentially is that is primarily a shift from central to local.

It shifts resources and it shifts power, in the human sense, and like any disruptive innovation, the old world is now struggling to prevent the inevitable.

In Western Australia the utilities are horrified to find that demand for their energy is dropping fast and are looking for ways to charge people generating solar power more.  In Spain, they are taxing solar energy.

In Georgia in the USA, the  rebel Tea Party members have forced the monopoly utility to open up to more solar power, to the rage of their national organisers.

It is the same kind of frustration among vested interests that have led water utilities to outlaw collecting rainwater in parts of Latin America, because it reduces dependence on them.

The question I ask myself is what kind of impact this growing divide is going to have here.  I find it hard to see the Anglo-Saxons putting up with their solar panels being taxed, unless the Tea Party takes over here – and, heaven knows, they might.

Nor do I see any political party making common cause with the big producers to make sure demand remains high, and that means something else is going to happen.  They are going to have to make a common cause.

Decentralised energy seems to me to be the instrument that will soon divide the energy industry into two, providing us with a kind of Railtrack solution – with the owners of the distribution systems on one side and the producers on the other.

Like Railtrack, I can imagine the grid and distribution system coming back under public ownership in some circumstances.  But the producers will increasingly be small and local, sometimes individual householders, sometimes local joint ventures between big producers and local communities.

Not only will energy production be much more decentralised, but the new dispensation will reverse the current money flows – which are now extractive from poorer areas and will soon go the other way.

This is a major step forward for local economic sustainability and I think it is rather exciting.  But it does make me ask another question: why on earth is my local council (Croydon) removing all the lamp-posts in the area, at vast expense, and replacing them with new models that have no means of generating any energy?

title: books by David Boyle
Broke Voyages of Discovery Money Matters Blondel's Song Leaves World to Darkness The Little Money Book Funny Money The Tyranny of Numbers