The energy industry is currently going through a transition globally. Politicians and the private sector have embraced climate change and there is a need to create a new kind of economy and innovation in energy entrepreneurship.
The petroleum and coal energy mix has been identified as being two of the major culprits driving global warming and we are finding that a shift is happening to transition towards renewables like solar and wind. The future of mobility and our main energy requirements will be met through electricity produced from renewable energy technologies. This shift brings with it entrepreneurial opportunities in the value chains of these markets.
New skills will be created and new entrepreneurship endeavours will be sparked directly or indirectly in the value chains that will hold these markets together.
IRENAs 2020 Cost of Renewables Report found that more than half of the electricity capacity added in 2019 from renewables cost less than the cheapest coal fired powerplants. Solar and wind technology alternatives have continued to drastically improve and have seen Solar PV (photo voltaic) costs between 2010-19 decrease by a whopping 82%, CSP (concentrated solar power) by 47% and onshore and offshore wind at 40% and 29% respectively. The costs to deploy these renewable energy technologies have drastically reduced and this is the major driving factor encouraging this shift. To add to this, these technologies have far shorter lead times from deployment to the start of operations, plus shorter lifespans – which means archaic technologies can easily be replaced for newer ones along cycles and they can be ramped up or down as necessary with the demand in capacity. These aspects are particularly important and appeasing to investors, because it means profit and ROI can be churned much sooner. For the politicians this is also attractive, because completion and operation of projects can be realised within a single office term.
There is also a growing trend towards capacitating a hydrogen and battery storage economy as a means of replacing internal combustion engines (or ICE vehicles as they are termed). Vehicles that use hydrogen as a mobility fuel or those that store electricity in the form of batteries do not produce greenhouse emissions which are contributors to global warming or climate change. Hydrogen is also particularly important because it can be used in many other industries outside its usage in hydrogen powered vehicles. There are four main kinds of hydrogen and are coined according to the process which was employed in manufacturing them; they are grey, blue, green, and turquoise hydrogen.
Without getting into the detail of each and every one of them, green hydrogen is the main focus globally as a potential alternative for this new green economy. Generally speaking, hydrogen is made through electrolysis, which is basically running a current through a water solution and this would split it into its constituents and of which one of those parts is hydrogen. It is termed green because the electricity used in that process would have come from a renewable energy technology like wind or solar.
The biggest challenge with manufacturing hydrogen is that it consumes a lot of water which may not be a viable option for a water scarce nation like South Africa. The alternative may be to use a desalination process which cleans sea water before it can be used in the hydrogen creation process. The issue with desalination is that it is an expensive endeavour and more innovation is still required to lower its costs.
In the meantime however, petroleum will still be around as these transitions are long term commitments that will take up to 50 years to reach maturity. Natural gas, although not a renewable energy source, is 30% less harmful to the environment than its petroleum counterpart and therefore will act as a bridging energy source in the interim. South Africa for example does not have a mature gas market economy and demand is often to mostly service the residential demand which is seasonal.
Natural gas is a great supplementary fuel that can provide for all our heating and mobility requirements. CNG (compressed natural gas) is for example a very viable fuel for adoption in our current motor vehicles and the technology is well researched and maturing in certain countries like India, Algeria and in Europe. Companies like Renergen and DNG are charging this drive forward in terms of procuring and provisioning LNG in South Africa for the domestic market.
Carbon Capture Utilization and Storage are also opportunities that are possible within this new green economy. This technology attempts to capture, store and repurpose the greenhouse gasses that would have been released into the atmosphere for utilisation in other industries. Carbon is very dynamic and has uses in a range of processes for the needs of modern civilisation. In South Africa we have platinum mines and therefore entrepreneurial opportunities exist in the battery manufacturing spheres for electric vehicles also.
It is clear to see that the opportunities that exist in the energy entrepreneurship sector are enormous. As new economies are going to be built, it means new skills will be created and entrepreneurship endeavours sparked directly or indirectly in the value chains that will hold these markets together. Solar and wind power provide the easiest entry point due to the lower costs in their technologies.
Various alternatives remain untapped because of the challenge of higher costs of deployment which will require more innovation and an entrepreneurial flair to bring about new solutions. There is however an enormous funding drive for energy entrepreneurship globally because of the urgency for nations to catch up on their Paris Agreement commitment. All-in-all this transition will still require clear policy direction to drive and attract investment, a political will to see it through and a buy-in from all stakeholders which include energy entrepreneurship pioneering this new economy forward.
By Thendo Thenga. Thendo is passionate about the energy and aviation sectors, and is currently employed as a regional advisor for PetroCONNECT.
