The Next Chapter: Four Storylines Driving the Energy Transition

Yuan-Sheng Yu, Senior Analyst

Over the past two years, Lux Research has tracked the energy transition through four key storylines – Power Grid of the Future, Evolution of Oil and Gas, Future Energy Sources for Mobility, and Carbon and Emissions Management. As with all stories, the narrative evolves over time, and the energy transition is no different.

The rise of renewable energy and electric vehicles will lead to significant changes the energy system has not seen in more than a century. Through these changes come new challenges and opportunities, as the pace of the energy transition varies by industry, technology, and timeline. To capture this evolution, the next chapter of the energy transition is upon as and the storylines inevitably change as well.

This year, Lux Research introduces four new storylines driving the energy transition – Evolution of Energy Networks, Decarbonization of Industry, Optimal Use of Resources, and Future Energy for Mobility.

  • Evolution of Energy Networks. Low-cost renewable energy isn’t just changing where end users are getting their energy; it’s changing how they get it as well. Energy networks are growing more distributed, interconnected, and interchangeable, driven by technologies that can accommodate the ever-increasing amounts of cheap solar and wind. Today’s isolated, unidirectional electricity, oil, and gas infrastructure wasn’t built for these complex energy networks of the future, so how will asset owners and the customers they serve adapt to this new energy landscape?

  • Decarbonization of Industry. Industrial processes remain the most difficult decarbonization challenge due to their high energy use, reliance on heat, and dependence on carbon service as the primary building block for a variety of downstream products. Furthermore, alternative technologies to replace incumbent processes are still under development and unlikely to alter the value chain anytime soon. As the industrial sector continues to grow, how will the industry remove emissions and carbon from its processes while still meeting the growing demands of its products?

  • Optimal Use of Resources. As the energy transition pivots its dependence away from fossil fuels, it will lean toward new energy technologies with different resource limitations. From reliance on key minerals for batteries, to fresh water for industrial processes, to land for solar and wind farms, optimizing resource utilization will be critical. However, the definition of optimization is also unclear, as cost, efficiency, emissions, and access to energy are all key variables. How will the roadmap for optimization unfold throughout the energy transition?

  • Future Energy for Mobility. Mobility continues to undergo its transformation with the rise of electrification and even a return of interest in hydrogen-powered vehicles. As electric vehicles continue their trajectory toward a critical tipping point in the market, some of the attention is now shifting toward non-road transportation – aviation and marine. With the continued drop in battery prices and increasing performance, will the future energy carrier for the rest of the mobility sector follow the same path toward electrification blazed by electric vehicles, or will alternatives be required to meet the demands of non-road transportation?

 

These are the critical questions behind the storylines driving the energy transition beyond 2020. Unlike the fast-paced digital technologies disrupting many facets of everyday life, the energy industry is a slow-moving behemoth that may take decades to fully transform. However, companies no longer have the luxury of time, as climate policies continue to put pressure on major industry players to mitigate their contributions to emissions and eventually shift toward low-carbon or carbon-neutral operations. With decades and trillions-of-dollars of infrastructure and assets optimally designed to provide cheap, reliable energy globally already in operation or planned for construction, the challenge of the energy transition becomes even more difficult.

Despite the challenges the industry faces, we expect an acceleration of progress over the previous years, the emergence of new players from adjacent industry into the energy ecosystem, and an eventual breakdown of the silos within the energy sector as the global shifts toward an interconnected energy system.

 

 


FURTHER READING:

- Download the Executive Summary: Global Energy Storage Market 2019

- Blog: Breaking the Barrier: 2035 Global Renewables Penetration

- Blog: Energy's Hottest Topics & Best Tech Start-ups of 2019

- Blog: Alternative Fuels: 2019 Year in Review

- Blog: Easing the Pressure on Hydrogen Storage

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