Picture: ISTOCK
Picture: ISTOCK

Energy cannot be created or destroyed, but only transferred from one form to another. In today’s energy landscape, that statement has many permutations given the changing shift from fossil fuels to natural gas and renewables. 

The accelerated drop in the price of technology, coupled with a tectonic shift in the political will of countries and global organisations, has created a momentum never before seen in such a short space of time.

There is a temptation to fantasise about solar-powered roadways and natural gas-powered vehicles, but the path to the reduction of carbon emissions and climate stability is not linear. It is rather a windy road paved with obstacles, some unintended others placed there deliberately. 

For example, in some regions historical investments in fossil fueled plants means their ability to reduce carbon emissions is hamstrung by their need to get a return from their investment in coal plants, to ensure it is operated efficiently to “sweat the asset”.

By inference, emissions linked to energy infrastructure are already essentially locked-in. In particular, coal-fired power plants, which account for one third of energy-related carbon dioxide emissions today, represent more than a third of cumulative locked-in emissions to 2040. The vast majority of these are related to projects in Asia, where coal plants are just 11 years old on average with decades left to operate, compared with 40 years on average age in the US and Europe.

However, financial institutions that traditionally fund fossil fuel projects, are making a complete shift to declining funding on principle going forward. For example, Nedbank has just withdrawn its funding of two coal-fired power stations in SA, and there have been reports that Standard Bank is reviewing its policy. Internationally, HSBC, Societe Generale and Deutsche Bank have publicly communicated their intention to stop funding the construction of new coal-fired plants. These policy changes are all in an effort to support the Paris agreement on climate change.

Adding further fuel to the fire — excuse the pun — is the undeniable momentum of alternative energy sources. In power markets renewables have become the technology of choice, making up almost two-thirds of global capacity additions to 2040 thanks to falling costs and supportive government policies. This is transforming the global power mix, with the share of renewables in generation rising to more than  40% by 2040 from 25% today, even though coal remains the largest source and gas the second-largest.

In SA, the biggest impact on the energy landscape in the next 20 years will be the integrated resource plan (IRP), which details the planned procurement of generation for the next few decades. While still in draft form, this policy document has given clear direction as to the intended energy mix for SA.

There is a planned ramp-up of the procurement of power between 2025 and 2030, suggesting there is an expectation that SA’s economic growth will “turn the corner”. In parallel to this increase in procurement is the planned decommissioning of Eskom’s coal-fired stations. The draft IRP indicates that 30GW (75%) of the current fleet would have reached end of life by 2040. This indicates that the renewables will continue to grow and gas and diesel will gain more prominence in the energy sector in decades to come.

However, the really exciting part of what the energy landscape will look like in 2040 is the impact of technology on how energy is not only procured but consumed. 

For example, Spain-based multinational utility Iberdrola has used blockchain technology to “guarantee” that the energy it supplies to its customers comes from 100% renewable sources. In an announcement earlier in 2019 , the firm said that it had undertaken an experiment with the financial entity Kutxabank. Using blockchain, Kutxabank was able track the origin of energy supplies in real time “from the generation asset to the point of consumption”.

Blockchain technology is starting to become an important tool for many industries, including the cryptocurrency sector. The attraction behind blockchain is that it allows for the aggregation of multiple transactions without the risk of alteration by any of the parties once the transaction has been recorded. With increasingly divergent forms of energy generation, blockchain technology will become more prevalent.

In the area of manufacturing great strides have been taken to improve the efficiency of various technologies, most notably solar technology.

In the UK a small start-up called Oxford PV (working in tandem with Oxford University) has developed a technology that  uses new material to make solar cells. Called a perovskite cell, the new photovoltaic tech uses a new type of material to ensure improved harvesting of light, thereby increasing the efficiency of the solar panel.

It’s the first new technology to come along in years to offer the promise of greater  efficiency in the conversion of light to electric power at a lower cost than existing technologies.

• Mdhladhla is chief marketing officer at energy retailer PowerX.