You’ve got quite a unique background for the energy sector. How do you believe it informs your contribution to the discussion on decarbonization and energy transition?
I’ve been working at the coalface of energy innovation for 20-odd years, including starting a clean energy company, a couple of solar companies – in both industrial and rooftop [market segments] – and a bunch of other energy technologies, including hydrogen, compressed gas storage, and HVAC.
For a long time, energy data was my hobby. I would read media articles and people would quote percentages of this or that and I studied the origins of how we collect all of our energy data. That even became part of my professional life when I did a project with the [U.S.] Department of Energy studying, in as much detail as possible, all of the energy flows in the U.S.
That work gives you a lot of perspective. I can literally rattle off the amount of energy used in abattoirs in the U.S., energy used to drive children to school on buses, the amount of energy we use in flat-screen televisions; you can have that much detailed knowledge about energy flows. And it’s with that perspective that you can really think about what the energy transition is going to mean, not just from the traditional supply side, which is why we will need this much solar and this much wind to displace this much coal and this much gas, but also gives you the demand-side machines view. How many cars, furnaces, hot water heaters, natural gas stoves and cooktops – and what has to be done in industry, transportation and so on. At a dinner party, I can be the most boring person with the most energy data.
From that demand-side perspective, what conclusion have you come to? Although the book title does pretty much give it away…
I have been very frustrated for many years by the debate and conversation in both the media and the general public, and even among professionals, about what the energy transition looks like. So, I set out to write the clarifying book about both the urgency and what the solutions look like. I think people needed the gaps in their imagination filled.
By a process of elimination, I concluded that if we are going to have anything like our current lifestyles, then it is going to have to be through the process of electrification.
How would you describe the role of PV in the transition you envisage?
I think there’s an even better answer for solar PV, which is, because of the cost of distribution grids, there will always be a place for rooftop solar. I don’t think that rooftop solar has hits its bottom [in terms of price], but if you look at the cost of installing in Australia, it is barely over $1 per watt unsubsidized. That pencils out as $0.05-$0.06/kWh for electricity. That is cheaper than the cost of distribution alone in the U.S., which is $0.07-$0.08/kWh on most electricity bills. It’s half the cost of most U.S. retail electricity, which is $0.128/kWh. So, in some sense, rooftop solar – once the industry is mature as it is in Australia – looks like it is going to be the cheapest delivered electricity anywhere in the world. There is always going to be a place for rooftop solar and I think there is a long way to go. If you look at installations so far, they look like awkward things bolted onto the roof. I think they are going to get thinner, sleeker, more elegant and integrated into the roof. And the installations are going to get larger. There is a lot more room for a lot more rooftop solar, and then obviously there is a huge amount of industrial solar going in. A solar tracking company that I was a part of, called Sunfolding, is going great guns, installing megawatts per week. What is astonishing for me, is that when we got into that game in 2008, I don’t think anyone viscerally thought we’d be bidding projects at $0.02/kWh delivered electricity, but that is where we’re at. It’s unbelievable.
So, solar’s cost will primarily secure its place in the energy transition?
Absolutely. I think it also needs to be said that this is only true because batteries are falling dramatically in price. If it wasn’t for batteries, then solar’s role would be more limited. In fact, if it wasn’t for batteries then I am not sure what we would’ve done for an energy transition. We have a line of sight that by 2024 or 2025, $50, $60 or $70 battery cells will come out of the factory. Batteries will get to this price point primarily because of the e-mobility sector. People will figure out how to package them and get them in homes and in cars and in appliances for $100-$150/kWh. Combined with rooftop solar, the grid in every country is just not going to hit those cost points. That isn’t to say that we won’t need a grid. There won’t be enough rooftop, or solar in the community, to supply all our energy needs. So, there will still be industrial solar and plenty of room for wind and for hydro as well.
So, in a sense, we have to think cross-sector in terms of decarbonizing. But cross-sectoral benefits, like the reduction in battery costs thanks to EV production, are also driving down costs. How important is that?
What I have taken to saying is that the more things we electrify, the easier it gets to electrify everything. Because if you were trying to balance vehicles alone, you’d have no hope. If you were trying to balance industry alone, you’d have no hope. If you’d try to balance residential loads alone, it would be a struggle. But the diversity of all these things and the way they overlap actually fills in a lot of the gaps and reduces the need for a hell of a lot of batteries. In some respects, breaking down those intellectual sector barriers in clever ways is what is going to give us a huge discount on the project.
You’re pointing to scale, and I’d like to note that we’re not even close to the bottom. The learning rates in solar are up near 20%, close to 20% for batteries, around 15% for wind – and that is the cost reduction for every doubling of production capacity. We need 10 times the batteries, 10 to 12 times the wind, and 10 to 16 times the solar, which all have various doublings of size inside each period of growth. Each one of these things is going to fall in cost by half or more before we get to the finish line. That is huge cost savings just built into the sheer scale of the project.
When you talk about decarbonizing, you talk a lot about machines – the car, the cooktop, the solar, and so on. Do you do that to break down the sectoral thinking that you’re talking about, because you’re simply reducing what can be thought of as sectors into individual items?
The enormous utility for me with Rewiring America, for the book and for the ideas that we are trying to popularize, is that by completely demystifying the task from here through to 2030, 2040 or 2050, politicians and people think about things in their kitchen, on their roof and in their garage, that they don’t think about the commercial sector.
I think it’s going to make the energy transition less scary to people. It gives them a substitution model for how they can replace the things that give them the quality of life that they want. Those things will be even better by being clean and electric. I think that is powerful. By doing that, we can reshape the conversation.
We’re talking a lot about individual homes, but what about on the city level? One of our cover stories in this month’s magazine is on sustainable cities. How important are sustainable cities and higher-density areas to this energy transition? In apartments, we have fewer of these individual machines or less control over whether they are electric or not.
Half of the world lives in cities; around half of those people are still living in suburbs with big roofs and standalone homes. But that still means somewhere between 20% and 40% live in multi-family housing. There is not enough space on the roofs of those buildings to make it work. So, that’ll have to be industrial solar and wind feeding those buildings. It changes where and how you do the batteries when you’re talking high density.
I think there will be a combination of subsidies, rebates and mandates that will make sure that governments support buildings becoming fully electrified. Cities will have to plan where the electricity comes from – there will be more community solar, ground sourced or heat, or a different pallet of solutions for higher-density cities.
Does that put city and regional governments in the driving seat?
City governments are going to play a key role everywhere. We had 100 years of cities writing building codes and designing infrastructure with fossil fuels in mind. And that leads us to ridiculous policies in countries all over the world limiting the amount of solar that can be put on the roof, because all of the building codes are designed around natural gas fires and heating in the home. But if there is not going to be natural gas fires, then the offset rules and the rooftop solar rules need to be changed.
Unfortunately, city and local governments in every part of the world are going to have to figure out how they will subtly change all of their buildings and codes for developers and building owners to optimize for electrification and how to make it cheaper. At Rewiring America, we have been helping the White House and Congress write the infrastructure bill in the U.S. and there are still huge constituencies that are lobbying for more efficient natural gas machines. At the federal level we are still fighting regulatory battles. There is 100 years of cancerous, fossil-fuel-driven legislation at the local city, state and federal level, and all of that regulation needs to be cleaned up to acknowledge that the infrastructure of the world is going to be different now.
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