I believe we are seeing the dawn of a new epoch in the energy industry. What I mean by that is the following: The energy industry will grow as a percentage of national income or GDP. Or said in another way, the energy industry will make up a larger slice of the economy. As the energy industry continues to grow as a percentage of GDP, it will be to the detriment of other economic sectors. Contrary to what some analysts think the service sector will be impacted by the continued growth of the energy sector. That is because the service sector constitutes the upmost layer of economic activity in an economy, the part that is removed from primary economic activity. It follows from this that society will try to reduce all forms of redundancies in the economy. This will further constrain the growth of energy-intensive industries, in particular the steel and chemical industry. Every process will be scrutinized if it is energy efficient. Governments will examine if energy-intensive sectors meet energy targets, and if they do not meet these targets one will have to take a closer look at what needs to be done to make these energy-intensive sectors more energy-efficient. So the question boils down to this: How can we make energy-intensive sectors more energy efficient?
One way to do this is to use data. We gather data all the time. This includes data from customers, and from operations and so on. Assuming we do all of this, we are still unable to provide enough energy to the economy. Even if we make good use of data, this will be inconsequential. Please let me explain.
The energy industry will focus on one issue over the next 20 to 30 years: Energy-return-on-energy-invested (EROI).
We need an energy source (we actually need different energy sources) which have a high EROI + that energy source has to be cheap and easily accessible to the population + the energy source we utilize has to reduce the environmental footprint of our industrial way of life on the environment. That will be a tall order.
As we approach the second decade of the 21st century, it becomes clear to most energy professionals that more and more alternatives are available on the market that directly or indirectly compete with liquid, dense, transportable energy commodities. This is only possible because we already have an infrastructure that was build with the help of fossil fuels. It would not have been possible just on the basis of renewable energy, as wind and solar power, biogas do not have sufficient EROI (Energy Return on Energy Invested) to make it worthwhile to undertake such projects on the scale that we saw in the last 100 years or so.
An economy based on renewable energy still requires continuous investments in the existing fossil fuel infrastructure and fuel economy. Fossil fuels continue to power our global economy, and they will form the basis on which the renewable energy revolution rests.
In this new energy paradigm, information sharing will play a pivotal role. Information sharing and the digital exchange of information allows us to cut inefficiencies in the electricity networks and in the energy infrastructure that we have build to support our lives.
Economic well-being and growth are closely tied to overall availability of energy resources
We should keep in mind that the energy infrastructure was build to maintain a financial system based on credit, which implies that our economic structure rests on an ever expanding economy, which in turn implies this is an economy of upward mobility for the majority of the population. On the flipside we are dealing with a steady-state economy if we do not have economic growth. When do we not have economic growth? Well, we do not have economic growth if renewable energy sources have a low energy-return-on-energy-invested (EROI).
If we cannot increase EROI of renewable energy installations such as solar and wind energy through technological innovation, we will no longer be in a position to expand our economy. This means we will have a difficult time to grow further and expand economic activity. This would mean we will not have capabilities to finance a renewable energy system. Even with the most advanced energy storage, this poses a direct threat to economic growth in the future.
If that occurs, we have reached an inflection point. We will have to make difficult choices. As far as the European Union and UK are concerned, this leads to two questions:
Does renewable energy lead to a more unequal society? Do we need more LNG from faraway places to cover our basic energy needs so that we can tell ourselves that everything is fine?
For any inquiries and/or networking opportunities you can contact me at the following email address: