I have a strong interest in renewable energy not only because of my concern of the environment and climate change but because I would like to explore ways of reducing the high cost of power in the Philippines. Maybe at least one of these technologies may be the one solution.
16 January 2012
By Max Pichon
|Five energy technologies to watch|
Recent breakthroughs in natural-gas extraction highlight the speed with which game-changing technologies can transform the natural-resource landscape. Just over the horizon are others—such as electric vehicles, advanced internal-combustion engines, solar photovoltaics, and LED lighting—that are benefiting from the convergence of software, consumer electronics, and traditional industrial processes. Each has the potential to grow by a factor of ten in the next decade. Writes Matt Rogers at McKinsey and Co.
Placing rapidly evolving technologies such as these on a resource cost curve, however, is difficult: their impact could be very big or very small. And that’s even more the case for technologies that require significant scientific and engineering innovations to reach commercial scale at viable cost. This article describes five technologies that could start arriving in earnest by 2020 or so: grid-scale storage, digital-power conversion, compressorless air conditioning and electrochromic windows, clean coal, and electrofuels and new biofuels.
Not all of these will succeed in the market; they will earn a place only if they can outperform the rising bar defined by other rapidly advancing technologies. But even if only some of them pan out, those could transform the energy landscape. It’s possible, in fact, that the development of energy technologies is approaching a tipping point that will generate increases in energy productivity on a scale not seen since the Industrial Revolution.
Compressorless air conditioning and electrochromic windows. Today, it costs about $3,000 to $4,000 ( a year to run a high-efficiency air conditioner in a hot region, and even the efficient windows now commonly used allow 50% of the cooling energy to escape. New compressorless air conditioners dehumidify the air with desiccants rather than the traditional “compress/decompress” refrigeration cycle. Electrochromic window technologies change the window shading, depending on the temperature difference between outside and inside. These technologies offer the potential to cut home-cooling bills in half. Advanced windows also could slash heating costs by half, allowing the sun to warm houses while keeping the cold out—the new windows are often better than the standard attic insulation in cold-climate homes today. These technologies are expensive now, but by 2020 they should cost only about half as much to install as current state-of-the-art cooling and window technologies do.
Clean coal. Today, carbon capture and sequestration (CCS) costs $8,000 to $10,000 per kilowatt (kW). Innovative processes now under development could help coal-fired generators to capture more than 90% of their CO2, at a cost of less than $2,000 per kW. If the technology is viable by 2020, it would be possible for nearly 70% of the roughly 200 US coal plants currently slated for closure in that year to stay open for decades. The same goes for similar plants in China and Europe. Without supportive carbon regulations, though, we are unlikely to see clean coal deployed at scale. Coal without carbon sequestration will always be cheaper than coal with it. On current course, though, coal with carbon sequestration could become cheaper, more reliable, and more widely deployable than many renewable technologies.
Biofuels and electrofuels. With crude-oil prices approaching $100 a barrel, market shares for biofuels such as cane and corn ethanol are rising rapidly. Although second-generation cellulosic biofuels have proved harder to make than many had hoped five years ago, innovative start-ups focused on cellulosic and algae-based biofuels are starting to create high-margin specialty chemicals and blendstocks, generating cash now and suggesting a pathway to deliver biofuels at $2 a gallon or less by 2020. At the same time, biopharmaceutical researchers are developing electrofuel pathways that feed carbon dioxide, water, and energy to enzymes to create long-chain carbon molecules that function like fossil fuels at one-tenth the cost of current biofuels. The key question is whether these new technologies can be scaled. If they can, today’s constraints on biofuels—the declining quality of available land and “food for fuel” trade-offs—may diminish.
Matt Rogers is a director at the San Francisco office of global management consulting firm, McKinsey and Co.