Welcome to the (not too distant) future
Developments in battery technology are driving the penetration of electric vehicles and adoption of alternative energy. Reliance on fossil fuels may be on the road to terminal decline, and there could be significant implications for everything from global politics to your daily life.
This is not speculation for the distant future. The start of your day 15 years from now may be very different from this morning:
As you head to your bathroom, you note that you are making money again from your solar panels, even as they instantaneously power your piping hot shower. And you see from the indicator that the store of energy in your small solar-powered home battery has only dipped to 80% of capacity despite weeks of poor weather.
After breakfast, your electric car slides silently to a halt outside the front door. Usually you catch up on emails during your 30-minute commute. But yesterday was a particularly successful day at work and this morning you feel like a treat. So, as you have grown confident enough in your self-driving car over the last year not even to keep half an eye on the road, you switch on the immersive virtual reality player and play the latest episode of ‘Robot Wars’.
The minutes pass only too quickly before you stride into the office full of optimism – helped by checking the price of your investment in BBC stock – the British Battery Corporation, of course, not the recently privatised broadcaster…
What seemed like science fiction just a few years ago is now a reality and will likely be a part of daily life for many of us within the next decade or two.
So what is changing now?
Battery technology has advanced significantly over the last ten years, making solar and wind power and electric vehicles far more attractive than ever before.
The rechargeable lithium-ion battery, has made possible the revolution in portable mobile devices. Since 1991, the battery’s energy density (the amount of energy it holds) has more than doubled, helping reduce the weight of the battery within an electric car, while its cost has fallen by more than 90%. Cheaper, lighter and more powerful batteries are crucial for electric vehicles to be cost effective and fast, and in giving alternative energy a greater role in the economy by enabling the storage of power generated by ‘intermittent’ renewable sources such as solar and wind
The commitment of many governments to tackle climate change is encouraging a change in taxation, subsidy and pricing to account for the negative ‘external costs’ of fossil fuels, such as pollution and global warming.
Transition to mass markets
The renaissance in electric vehicles was championed by environmentally conscious early adopters who were happy to put up with limitations such as a maximum range of 100 miles on a single charge. But now, manufacturers are beginning to offer a competitively priced range of cars that don’t require any sacrifices in range or performance. Tesla’s long-awaited Model 3, due for release this year, has a starting price of $35,000 (£28,000), the average cost of a new American car. Electric models are due from Chevrolet and BMW this year too, and Volkswagen is mapping out plans to produce 2-3 million a year by 2025. This should all increase penetration of the total car market.
The reduction in the unit cost of batteries is key to a potential transformation of energy production – not least the development of a mass market in home energy production. Batteries can store electricity generated in favourable conditions to be used at other times of the day or week; lower battery costs make this more financially viable. This offers the tantalising prospect of home owners becoming self-sufficient and going ‘off-grid’, or even being able to generate extra money by selling surplus electricity back to utility companies.
Improvements in cost-effective battery storage will allow national grids to manage unpredictable inflows of solar or wind power and continue to provide electricity on demand even as more reliable fossil fuel generation is phased out. This will enable renewable energy to become a much more important part of the energy mix than it is today.
An investment theme to tune in to
Implications for some industries and countries will be far reaching. Companies which are wholly focused on old technology, such as car companies wedded to the internal combustion engine or fossil fuel-reliant power generation companies, will face significant challenges. So too, the role of centralised utility companies could be undermined by the growth of self-sufficient homes and businesses.
It is now a realistic prospect, due to advances in alternative energy and electric vehicles, for the world to meet climate change and carbon emission targets without sacrificing economic development and standards of living. Potential investors need to be tuned into the momentous advances being made. We will be monitoring developments in order to identify the winners and – perhaps more numerous – the losers.