Venture capital and private equity investment in emissions-free renewable energy increased by 34% to USD 3.4 billion in 2015 from the USD 2.5 billion invested in 2014 (Bloomberg New Energy Finance) despite generally declining oil, gas and coal prices.
Investment growth in renewables is to a large extent explained by rapidly falling deployment costs due to technology efficiency improvements, economies of scale and optimized production processes. Here in the United Arab Emirates, the 800-megawatt solar-power project for the Dubai Electricity & Water Authority utility was awarded in June 2016 at a generation cost of 2.99 U.S. cents per kilowatt-hour, establishing a new industry benchmark that is competitive with and in some cases below even coal-fired generation costs. At a policy level, the outcome of the United Nations COP 21 in late 2015 is expected to promote the adoption of energy policies that increase the share of renewables in the national energy mix as an element of governments’ climate mitigation policies.
Furthermore, the modular nature of solar panels and wind turbines has enabled the emergence of a more distributed generation model in certain emerging markets, for example parts of the Middle East and Africa where off-grid rural electrification is increasing.
Distributed Energy, defined as energy technology co-located with energy load, is set to become increasingly important in the power market. In developed economies growth will be driven by improved economics derived from decreasing system costs and increased electricity rates as consumer subsidies are phased out. In developing markets, where grid penetration is low, distributed energy resources will increasingly provide electrification to rural areas and remote site, mission critical assets in the oil & gas, mining, telecom, and industrial sectors.
Distributed Energy has three main areas: generation, storage and management & control. Within this wide panorama there are certain disruptive technologies which are likely to have a dramatic impact on power markets, displacing established technology and fundamentally changing the industry. In the context of distributed energy, these are technologies that will shift the system price point, operational performance or payback period significantly with respect to the competition, effectively re-shaping the market. It is foreseeable that in some markets the traditional utility-based generation model connecting individuals with a remote power plant will be replaced in by a distributed generation model producing smaller batches of electricity in more places requiring batteries and storage solutions.
Catalyst Ventures leverages its knowledge of renewable and distributed energy technologies, value chains, government policies and market economics to identify the most promising business opportunities consistent with this major trend.
Solar and wind power generation capacity has been growing at double-digit rates, but these renewable sources of energy still satisfy less than 5% of global electricity demand. An important limitation to adoption has been the intermittent nature of the energy source, because of the lack of cost-effective, reliable technology to store the excess energy made when the conditions are ideal, and to release the power to the grid as demand picks up. Improved energy storage could solve this problem, enabling emissions-free renewables to grow even faster – and making it increasingly practical to bring reliable electricity to the 1.2b people who currently live without it.
When deployed in conjunction with solar power systems new types of sodium, aluminium or zinc based batteries deliver sufficient capacity to power individual residential, commercial and industrial properties, as well as mini-grids in rural or remote areas.
The use of affordable and scalable grid-scale batteries combined with renewable generation promises to transform lifestyles through 24-hour access to electricity in hard-to-reach remote and rural communities. Globally, continuing technical developments in the advanced metal anode batteries and other energy storage systems are expected to transform the market for energy storage from approximately USD 200 million in 2012 to USD 19 billion by 2017 (IMS Research, 2013).
The increasing deployment of renewable energy systems, distributed generation and energy storage technologies require the implementation of smart meters and smart grids to manage electricity demand and supply using real-time data flows.
Sensor-based “smart” meters that monitor and transmit energy consumption information in real-time to the smart grid are central in transforming consumers’ abilities to manage their energy consumption. A smart grid utilizes the real-time information received from energy consumers and suppliers to anticipate and react to demand and supply changes, increasing overall grid reliability and efficiency.
A great deal of momentum exists behind the use of smart infrastructure in Dubai to efficiently manage energy and water consumption, which is seen as a key factor in the long-term strategy of transforming Dubai into a sustainable city. As part of Dubai’s “smart city” initiative, grid control decisions will increasingly become automated and a quarter of a million smart meters will be installed in residential units and commercial premises.