Unintended Consequences; The New World of New Energy
Electricity markets have changed as renewables have taken more market share. This has created problems for which there are now solutions. Delivering these solutions is a new generation of new energy companies who do not rely on policy and have market-led business strategies.
The new world of new energy
New energy and clean technology has been a difficult area. Many companies have failed to deliver good returns. Many have failed to see beyond their potential for saving the planet to the important needs of marketing, funding and delivery. Many have been over reliant on policy support which has been variable and is now even more uncertain given the US election outcome and a potentially fracturing Europe. But
this has not prevented over 700GW of renewable generation being installed around the world. That is almost ten times the UK’s total available generation capacity.
Significant market potential
This volume of capacity has reduced the cost of renewable energy to the point where it is competitive with traditional generation in many places. However renewable energy is usually poorly located relative to demand, intermittent in its output and can lead to volatile pricing. These problems all have solutions and this is where we see strong investment opportunities. Combining a variety of published sources suggests
that the annual market potential here could be of the order of US$ 0.5 trillion by 2020.
Smart energy solutions
At the consumer end of the supply chain the growing use of smart meters and other smart devices is allowing better control of electricity networks. Cyan Holdings is a leading provider of technology here. While this is mainly driven by network operators there is also growing customer demand for control solutions and related connected devices. Flowgroup is developing business in this area.
Flexible generation and storage
Network operators are responding to changing markets by deploying more flexible generation and this looks set to grow. However the potential game changer is affordable storage. Costs are coming down in many situations and technologies are improving. Electro Power Systems and Leclanché have strong storage offerings. Plutus Powergen is rolling out a portfolio of flexible generation assets.
Independent supply and generation
The incumbent energy supply companies have and will continue to suffer as a result of market changes but this creates opportunities for smaller, more innovative independent suppliers. This has been a particular strong story in the UK and we see further growth here. Flowgroup again and Good Energy are growing customers here. We also see continued demand for distributed generation and AFC Energy is targeting key niche markets here with its fuel cell product.
Renewable energy development
Finally we see renewables continuing to grow as a generation source particularly in newly industrialised countries where rapid deployment and expensive alternatives make this a very suitable solution. Indian developers OPG Power Ventures and Mytrah Energy are both adding capacity. We also see opportunities to further develop renewable technologies and Windar Photonics has a key product in this area.
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