Re-thinking Electricity Grids
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It’s time for a new approach
In a recent FT article, a German utility leader claimed that Europe must “boost grid to cope with renewable power surge” that involves new investments of “up to €39bn a year to 2030”.
Not only is that thinking passé, but it’s also extremely expensive thinking! But is there a better way?
One of the mega trends advanced societies are witnessing is decentralisation and localisation, enabled by technology advancement. Decentralisation provides more efficient and transparent products & services and “buy local” is a growing theme, given that globalisation has not benefited as widely as promised.
And the two sectors that are decentralising in hyper-mode are the financial & power sectors.
The traditional financial sector is under attack by fintech companies (e.g., Revolut, Nexo) that provide better service & better customer experience. The crypto markets may be suffering due to the unprecedented number of scandals in 2022, but de-centralised finance (#DeFi) is here to stay and it will continue to grow at the expense of financial institutions. Bitcoin is also here to stay and will survive yet another “crypto winter” to, once again, prove its detractors wrong (mostly because fiat is failing & has always failed over human history — but that is a topic for an entirely different post).
As for the energy sector, large-scale thermal power plants requiring mega transmission grids may have once served a purpose … but no longer. The simple fact of the matter is that new wind and solar PV installations provide cheaper electricity than new large scale thermal (think natural gas & coal) generation assets. Plus, they are cleaner, although these positive attributes come at the cost of intermittency.
So, back to this FT article.
The old, centralised, utility mindset way of thinking would be — Let’s build more big, expensive grid to move electrons hundreds of kilometres! — rather than prioritise a more local, decentralised and flexible approach. Technological advancement now enables a new approach, a new way of thinking.