Tag Archives: renewable energy

Soon your car will be cooking your dinner

Can you imagine using your car to power your kitchen appliances? Steve Abbott, business development manager at clean tech company Hyperdrive Innovation, envisages a greener future where consumers will harness energy from electric vehicles to power their homes…

The colder autumn weather will soon see us swapping BBQs outdoors for nights in watching boxsets, and it won’t be long before we’re all cranking up the heating. Naturally, household energy usage will begin to creep up and so will demand on the grid. But with our reliance on energy bound to increase over the next few months, how can we ensure we keep lights on, bills affordable and carbon emissions down?

With climate change continuing to be a pressing issue, the need to become more energy efficient and reduce reliance on fossil fuels has never been more important. You only have to look at the growth in electric vehicles to see a global shift towards creating a greener future. In the UK, the need to develop a smart grid for ensuring a resilient, clean and lower cost energy network is particularly prevalent. Tech companies are seeing the issues around balancing power supply and demand as an opportunity to develop smart energy solutions to build fewer new conventional power plants in the UK.

Thanks to advances in technology, energy storage at a domestic level is one concept that is fast becoming a more widespread possibility. Already we have seen the hype around Tesla’s Powerwall, the battery which allows homeowners to harness energy from renewable sources and make it available for household use. However, given its hefty price tag, alongside switchgear (electrical equipment) and installation costs, a Tesla Powerwall isn’t yet a viable solution for every homeowner.

Smaller British tech companies are working to make energy generation and storage a more affordable possibility for homeowners. In the future, consumers could generate solar and wind energy at home, store it and sell it back to the grid at times of peak demand using lithium-ion batteries. This would not only provide added flexibility for network operators but also create an additional revenue stream for homeowners, therefore reducing payback of renewables systems and providing an incentive for more homeowners to invest in distributed energy generation and storage.

Electric vehicles could take this concept even further. The batteries in EVs could be used to store energy and pump it back into the system at peak times when consumers need power most. They could be charged over night when there is excess capacity available and be ready to discharge power to the grid by the morning. This means that when everyone switches on the oven at dinner time, energy stored in the batteries could smooth out those peaks in demand and allow the network to run more efficiently.

The potential for harnessing energy from renewable sources is very significant. With access to energy storage technology, consumers can not only generate improved returns on their solar and wind installations but help to develop a cleaner, lower cost energy network. With question marks still hanging over investment in new nuclear power, and fossil-fuel fired generation out of favour, consumers adopting the latest energy storage technology could really make a difference as we look towards a greener future.

This commentary was provided exclusively for Hot Commodity by Hyperdrive Innovation.

Dong Energy’s IPO shows why offshore wind is more than hot air

Like Saudi Aramco, Dong Energy is now in the midst of preparing for an initial public offering.

The Danish energy giant’s June listing is expected to value the firm at up to $16bn (£10.9bn), making it one of the biggest flotations of the year. It will of course be dwarfed by Saudi Arabia’s oil colossus, which has been valued (perhaps overenthusiastically) at up to $2trn, but it’s still not to be sniffed at.

I think the two energy companies make for an interesting comparison. On one hand, you have Saudi Aramco – a longtime oil Goliath that has provided the Gulf state with lucrative revenues, but has recently fallen into comparatively tougher times as a result of the oil price rout. Saudi Arabia has now had to stop using its oil revenues as a piggy bank, has tapped the debt market and will be tapping the equity market in order to get rid of its deficit (which came in at a national record of $98bn last year).

I’m sure its plans to raise money will succeed, as well as its new strategy to diversify its economy away from black gold. But what for oil itself? Where will it sit in a rapidly changing energy sector where it must compete with other sources such as shale, at a time when the West is pushing energy-efficiency and a move to renewable power, while China’s energy demand is slowing down as its economy slows?

This brings me on to Dong. The energy firm, which counts the Danish government as its biggest stakeholder, used to have a major focus on coal but has now transformed itself into the world’s largest offshore wind farm operator. It has tried – unsuccessfully – to sell its oil division, as it looks to shed its “dirtier” assets to become greener than green.

Its efforts have paid off. Since 2013, when it was still struggling post-financial crisis and Goldman Sachs bought a stake in the firm (amid a gigantic public furore into the influence of the US investment bank on a state utility), it has increased its profitability – thanks to its offshore wind division.

Renewables are expensive and controversial. While they make sense environmentally, they require hefty state subsidies in the transition period and transitioning too fast can be a costly burden. Certain types can also be less reliable, such as solar and wind, as they are dependent on certain weather conditions.

In the UK (where Dong makes large profits), energy secretary Amber Rudd has called for deep cost cuts to offshore wind farms if they wish to receive billions of pounds of new subsidies.

But – and excuse the pun here – they’re the way the wind is blowing. Political pressure to implement and raise renewables targets mean that they’re here to stay. They just make long-term sense, despite their short-term challenges.

Perhaps it is a little simplistic to say that oil is the past and renewables are the future, especially at a time when the former is relatively cheap and the latter still expensive. And oil is still one of the world’s major energy sources, while renewables are a mere pipsqueak. A pipsqueak still relying on handouts from mum and dad.

I’m sure bankers and investors will be able to profit from Aramco’s IPO more than Dong’s, despite the changing fundamentals.

But with a move to greener energy sources inevitable in the developed world and oil reserves (and revenues) depleting, I wouldn’t be surprised to see the balance changing – after all, the vampire squid must be smelling money…

Latest oil price slump shows that black gold has lost its lustre for good

Oil tumbled more than two per cent yesterday, edging perilously close to an 11-year low despite growing fears of World War Three kicking off between Saudi Arabia and Iran.

You’d think that the risk of disrupting supply from two of the world’s largest producers would rattle traders, but no! Late last night you could buy a barrel of brent crude for a little over $36 (£25) – small change compared to the $115 highs of Summer 2014. Prices had trickled down to an 11-year low of $35.98 just before Christmas.

I’ve been bear-ish on oil for quite some time now despite some spikes throughout the year and I still think it could drop to $20 a barrel. But increasingly the market consensus appears to be that oil will rise in the medium term.

The typical view from people I speak to is that Opec (for which read Saudi) will keep production high, which will keep prices low by creating a supply glut. This in turn will cause other producers (for which read the US) to cut their output as they can’t make a profit and eventually this will push prices up as there will be less oil around to meet the demand.

I think this is a far too simplistic a theory.

Firstly, I think the decrease in production, namely from the US, would have to be incredibly dramatic and it would take quite some time to show up due to their mammoth stockpiles of oil. This would be a long term not a medium term effect – and would only work this way if there are no other mitigating factors. I wonder if the hand of government would come into play if the mighty US lost its booming shale industry that was turning it from a net importer to a net exporter of energy?

Secondly, this theory only works if demand stays the same. And here lies the unknown. With growth in China – the world’s largest consumer of commodities – having slipped back into second gear, will there be enough demand to keep oil prices high? The market volatility in China this week shows that no-one really has the faintest idea about what’s going to happen.

Meanwhile in the West, increased energy efficiency measures and investment in renewable power sources mean that oil isn’t the master of the energy market that it once was. There are even predictions that the West’s energy consumption will decrease by the 2030s.

Why does everyone assume that oil prices must, and will, stabilise at a higher price? Surely a lower price could eventually become the new normal and economies would have to adapt or die as a result?

Are you an oil bull or a bear? Email info@hotcommodity.co.uk with your views.

Happy New Year to you all!