Tag: solar

Digital Supply Chain – Women in Supply Chain a chat with @circular_nomad and @supplychnqueen

As well as running the Digital Supply Chain podcast, and the Industry 4.0 themed series of podcasts, I decided to also spin up a new series – themed around the topic of Women in Supply Chain. This series will strive to highlight the stories of women leaders in Supply Chain to attempt to address the current imbalance in their representation on panels, podcasts, etc.

Kicking off this series, I invited Sheri Hinesh (@supplychnqueen on Twitter), and Deborah Dull (@circular_nomad on Twitter) to join me for the inaugural podcast, as they have their own very successful Supply Chain podcast Supply Chain Revolution.

We had an awesome conversation covering topics as diverse as the impact of digital goods, the transition of our energy systems to clean energy, sustainable supply chains and the circular economy.

Listen to the podcast using the player above ☝🏻, and/or see the full transcript below 👇🏻:

Sheri Hinesh [00:00:00] And when you think about sustainability through the lens of supply chain and even digital, 50 to 80 percent of the revenue spend happens in supply chain. And so, do, up to 85 percent of the environmental impacts, social impacts of supply chain. so, who better then than us as supply chain practitioners who have that end-to-end interconnected view of the world of business, of the communities where we operate to really do something epic?

Tom Raftery [00:00:32] Good morning. Good afternoon, or good evening wherever you are in the world. This is the Digital Supply Chain podcast, and I am your host Tom Raftery

Tom Raftery [00:00:41] Hi, everyone, welcome to the Digital Supply Chain podcast. My name is Tom Raftery. This is the first of a new series that we’re going to run on Women in supply chain. And with me, I have two of the highest profile women in supply chain today, Deborah and Sherri. Deborah and Sherri, would you like to introduce yourselves?

Deborah Dull [00:00:59] Hello, I’m Deborah Dull. Thanks, Tom, for having us on. The most important supply chain related introduction about me is that I have a deep love for inventory.

Tom Raftery [00:01:12] Fascinating, fascinating, and that laugh there is from Sherri, Sherri, would you like to introduce yourself?

Sheri Hinesh [00:01:17] Hello, world digital supply chain, folks. My name is Sherri Hinish, and my vision is to change the world through sustainable supply chain, evangelizing the SDGs and making the world a better place. The world that we share. I’m also affectionately called the Supply Chain Queen. And I have a podcast with Deborah called The Supply Chain Revolution, where we share provocative points of view that challenge paradigms for progress, say it three times.

Tom Raftery [00:01:50] so, Sherri for anyone who is unfamiliar because this is a digital supply chain podcast, not a sustainability podcast, so, people might not be aware. What are the SDGs?

Sheri Hinesh [00:02:04] Sure, so, the SDGs are a framework where we can achieve as the human race can achieve economic and social and environmental prosperity in the world that we share. And with everything happening right now with Covid-19. This is really important for us to understand that we’re all connected. And the SDGs are 17 interconnected goals that would help us to achieve a better world by 2030. so, this is really about the decade of action. How can we encourage a world that has no hunger, where we have economic growth and prosperities in the community where we operate, that supply chain touches? Responsible consumption, responsible production, where we protect life below water and life on land. And it’s really a beautiful vision. I’ve devoted my life to really sharing this picture and framework of a better world, that’s super tangible that people can connect to and that we can really mobilize each other in a meaningful way in the world we share. We have to get there. We have to get in the canoe. Deborah and I always talk about this like get in the canoe. We can do it and we need inspiration right now more than ever Tom.

Tom Raftery [00:03:30] No, I get that completely, I’m a former sustainability analyst for seven years or so, before I joined SAP, so, you know, you’re completely speaking my lingo here. But tell me, I mean, maybe, maybe. Deborah, jump in here. What does sustainability have to do with supply chain?

Deborah Dull [00:03:46] Great question. so, one of the topics that I love most, which is related to but different than sustainability, is the idea of a circular economy. And I’ll explain what that is briefly. But the answer to your question is that the way the world operates is through supply chains. so, every supply chain manager impacts the planet and impacts sustainability. And when you talk about financial sustainability, environmental sustainability, social sustainability, the choices we all make in our day to day impact that where we buy, how we buy, how we manage our suppliers, do we make bridges or do we hold people negatively accountable, for example? All comes back to the human connection that Sherri talked about, certainly. And when we talk about the concept of a circular economy, I think supply chains are uniquely positioned to really catapult the businesses and organizations that we support. And what I mean by that is if we look at the way the world works today, we take an item from the planet. We make something very efficiently, we use it. And then typically that item gets thrown away. And there’s a new economic model that says, hold on a second. All those items we’re throwing away, there’s actually more money to be had. We could squeeze more out of those materials and everybody makes more money. And so, if we think about the way to circulate and loop all of these materials and resources, even like heat or organics or plastics or metals, it’ll come down to supply chains, ability to find, circulate, move it, track it, bring it back. Is it socially responsible? Is it safe for human consumption? And I can’t think of a discipline more impacted than supply chain. And the flip side, who can impact more than supply chain can? We certainly have to work across material scientists and economists and those who design these systems. But if we look at the US workforce alone, 37 percent of jobs are supply chain related. And so, we have this massive cohort. And given that we’re such a new field, I think we haven’t really been considered like that at a global scale. And these days, though, it’s hard to read the news or turn on the radio without hearing the word supply chain every five minutes, which if I take my rose coloured glasses on here, I see it’s just a tremendous step forward for our field.

Sheri Hinesh [00:06:14] And Deborah, you make a great point. That supply chain is truly the conduit. And when you think about sustainability through the lens of supply chain and even digital, 50 to 80 percent of the revenue spend happens in supply chain. And so, do up to 85 percent of the environmental impacts, social impacts of supply chain. so, who better then than us as supply chain practitioners who have that end-to-end interconnected view of the world of business, of the communities where we operate to really do something epic? In the next wave in the supply chain revolution. This is this is our purpose right now, so, we’re super excited.

Deborah Dull [00:06:58] If think about Tom, if we think about the impacts of digital digital supply chain. so, actually, fun fact. I wrote my master’s thesis on the digital supply chain. But at the time this was *mumbles* years ago, it was actually about digital goods. so, I talked to Amazon, the Kindle team, I talked to the Netflix team. I talked to Sony. And so, when they were moving digital goods around the world. And the reason why this is so, important is the cloud is a real physical place that’s supported by real physical supply chains. And so, as we who are in software make decisions about product or as we as consumers make decisions about how many copies of our vacation photos we keep. That has a physical impact in the cloud. And if we make choices, that requires twice as much storage space. That’s twice as many servers, twice as many spare parts, twice as many supply chains, twice as many power requirements, twice as many mechanics engineers to repair. And they’re going to be driving there. so, you duplicate the whole thing. The other interesting factor is how much energy A.I. takes in chugging through their algorithms. It’s something like 30 percent of the world’s power right now is being taken just to help AI think. And these are elements that I don’t think are highlighted enough but relate very much to digital supply chain. Regardless of the way you define digital supply chain, whether they’re digital goods or the digital backbone that supports the physical supply chain.

Sheri Hinesh [00:08:36] You know what’s crazy, so, right now, a lot of people are talking about this pivot to virtual and how we connect digitally and how the CO2 impacts. And I know, Tom, this is right up your alley because you post a lot about climate change. And I saw a quick and dirty study from IBM, and I think it was Jeremy Waite that positioned that the pivot to Virtual actually has the same impact as people driving every day. so, when we start to think about digital supply chain in the world, we share digital waste. And are we really being as lean and effective in this new way of working? Where’s the opportunity? so, I would I would love to hear your point of view, Tom, around that. What are you hearing and seeing?

Tom Raftery [00:09:23] so, I missed that post and I would have assumed that working virtually working from home, for example, like all of us are now thanks to Covid-19, would have had a lower environmental impact. But you’re saying that Jeremy’s post said that, no, it’s similar because the technologies we’re using require large amounts of technology which are carbon intensive?

Sheri Hinesh [00:09:51] Yet our energy grids are still dirty and highly reliant on fossil fuels. so, depending on where you are in the country with your energy mix, you still have this very comparable impact. so, I thought it was a really, you know, in terms of education, I think this is really the pulse here. And the opportunity is we need to accelerate the transition to renewables. And if we can do that, if we can do that, you know. What might that look like?

Tom Raftery [00:10:23] The cool the cool thing is that I’ve done a lot of work on this. The cool thing is, speaking of renewables, that the transition to those is happening not fast enough, but it is happening. And it’s happening not because people are suddenly turning into tree huggers. It’s actually happening because the renewables are a) cheaper to roll over than any fossil fuel alternative and b) faster to roll out. There’s a new offshore wind park being built in the UK on the Dogger Bank. It’s 3.6 gigawatts. That’s three and a half nuclear power plants worth of wind, offshore wind, and it’s being built in two years from start to finish. There is an equivalent. There’s an equivalent called Hinkley C in the UK again, Hinkley C is a nuclear power plant. It’s 3.5 gigawatts. so, comparable power output. It’s going to take 10 to 15 years to build it out. Whereas the wind park the offshore wind 2 years. so, right there and you know, nuclear has a place. I know some people are against it. It’s a polarizing generation, but it is carbon free, essentially, once you’ve built the nuclear plant, it’s carbon free. But it doesn’t scale. It does not scale. Renewables scale massively. There’s. Because, again, down to economics. There is a solar farm being financed right now to be built in the north of Australia. It’s called Five B. I think if I remember correctly, it’s being it’s being financed by, amongst others, Mike Cannon-Brookes from Jive. And it’s going to be ten gigawatts, 10 gigawatts, 10 nuclear power plants worth of solar with 22 gigawatt hours of storage. so, 22 nuclear power plants worth of storage in the Northern Territory in Australia. They’re going to draw a big cable off to the right to power the city of Darwin. And they’re going to draw an even longer cable north three and a half thousand kilometers to power the city of Singapore. And again, it’s down to economics. It’s because it’s the cheapest way to do it. Australia has vast, vast, vast tracts of unused desert which can be used for these kinds of projects, which can be used for turning Australia into a hydrogen economy. You know, they can just put a massive mass of solar plants, generate as much hydrogen as possible and sell the hydrogen off into the global markets for electricity generation or for transportation.

Deborah Dull [00:13:07] It’s amazing. I’m so, glad you brought that example up, Tom. And just to reiterate the brilliance and excitement around circular models. One of the tenets is a shift to renewable sources of energy. And, you know, there’s two questions to ask yourself on. If a model is circular or if it just falls under CSR, and that’s is it making you more money? You can go faster, and you could be cheaper if you’re looking at something like a circular business model and in supply chain. I don’t know how many more levers we have left to pull to get faster, cheaper. We’re pretty fast and we’re pretty cheap, free in most cases or nobody’s paying for it at least. We have a cost. so, we have to start thinking of other levers to pull to add additional value back to organisations we support. And so, the examples you’re giving are brilliant because we’re going faster, it’s cheaper. And then if we think about, let’s say, a spare part to support one of these farms that’s going in, we could start from scratch, start from the metal, from the earth. But that takes more time and it’s going to cost you more if you can refurbish and use B channel parts or even your own parts refurbishing or shocking, I see a world where all similar parts will be refurbished and shared and within a single industry it’s going to be much, much faster and it can be much, much cheaper because you’re not starting from virgin raw materials anymore. so, I think it’s a fascinating model. And the biggest message to get through this is you can make more money as a company. And it just so, happens that it’s also great for the planet. so, it helps to span this gap of the sustainability drive that we all know needs to happen. And the sheer economics of running an economy that we’re all becoming very aware of these days and I think is just a lovely example. so, thanks for sharing.

Tom Raftery [00:15:03] Yeah. And you mentioned something earlier, Deborah. You were I mean, you used the expression that a lot of people use of “throwing things away”. And I remember, I can’t remember when it was or where it was, but I remember reading some point somebody saying that “There is no away”. Away is not a place. It doesn’t exist, you know? You know, so, throwing things away doesn’t make sense. It is not a thing.

Deborah Dull [00:15:30] You are just moving it to someplace else. Yeah, exactly. I actually think in the next… After we mine the ocean for plastic and let’s not be mistaken, that’s exactly what companies are doing now. We are we are now mining the ocean. We will move to landfills. I’m guessing in the next 10 years because we are running out. We’re running out of gold. We’re running up copper. It is still on the surface of the planet. To your point, unless cities are burning and a lot of people say, oh, cool, you’re burning garbage to create energy. But that’s actually not great because you’re losing all the value in the material. So, yes, you’re getting a short-term boost of energy. But actually, in reality, that’s the closest thing to “away” that we have is to burn something and you can no longer get it back again. so, much better is to find a way to retain the value of that item and reuse it as many times as you can.

Sheri Hinesh [00:16:21] Yeah. What we’re what we’re talking about here in describing is really this shift where supply chains who have traditionally been viewed as maybe transactional. And this cost improvement, you know, riddle it down to as efficient as possible. They’re really transitioning to an innovative catalyst that is a strategic partner at the table. And in the future of work. In the future of business. Competitiveness will be defined how your supply chain can execute and innovate. And that’s where we really believe that that’s where the future’s heading. All of the things that are described in in circular economy and sustainability. Yes, you can do well and do good, but there is a business case to be made for why. How you connect people is equally as important when you think about purpose, economy and experience economy. People want to show up at work and not leave their values at the door and be a part of something that’s truly transformation on EPIC. And this is the opportunity that supply chains have because we are so, in the end and we are a tapestry of different professionals. You know, when you when you say supply chain, what does that even mean anymore? It could mean data science. It could mean sourcing and procurement. It could mean your own distribution. Logistics. It could mean inventory. Deborah loves inventory. If you ever meet Deborah Tom face to face and bring up inventory, make sure you have a stiff pour of whisky because she will talk to you for hours.

Deborah Dull [00:18:03] Digital inventory is also super interesting. I had a whole section in my thesis on it. Punch line. It basically comes down to master data, which is also a very interesting topic. People roll their eyes, but it’s not, so. It’s often considered the inventory of a digital digital goods supply chain. If you’re moving around digital goods, it’s your master data and that the way you manage your master data is similar to managing inventory and you can use a lot of the same principles. Super fascinating. I love this stuff. That was not even a whole stiff pour Sherri. so, that was like half a finger.

Tom Raftery [00:18:42] I had no whisky ready. Jeez, Deborah, come on. You could’ve warned me.

Deborah Dull [00:18:46] I know next time that’ll be a different one. We do something called drink and learns on our podcast and we invite you to come to a drink and learn where we drink and learn. And it’s really super fun. And you’re you’re open. You’re openly invited Tom anytime.

Tom Raftery [00:19:00] I appreciate it. Thank you. I have listened to your podcast, so, I’m aware of some of these things. Thank you. But for people for people who haven’t listened. This is a good learning experience. And I’ll put a link to your podcast in the show notes as well. Just in case, you know, people are not aware of, but they can follow through and subscribe and do subscribe folks like and do subscribe to this one, too. Just just in case you’re not already subscribed. We’re coming towards the 20-minute mark. We’re at 18.50, right now. Is there any final thing you want to say to people who, you know, have been listening so, far who’ve made it this far into the podcast? Any last messages you want to leave with them?

Deborah Dull [00:19:36] Absolutely. Look. OK. You’re pointing at me, so, we’re all. And we’re all we can see each other right now. so, my final words are, look. There’s enough bad news happening in the world. We are all probably indoors for something going on two to four weeks depending on where you are in the world. And there is another way to connect with each other. One use of this digital technology that, yes, is using energy and a server somewhere in the world is that you can find a new community. We have something that we call the supply chain rebel who really describes if you feel different than those around you. If you feel like you’re pushing back, if you feel like perhaps you don’t have a community connect to. We are your community. And whether you are feeling too old, too young, not experienced enough, too edgy, too soft, whatever the too is that you’re feeling in your surroundings where your people. so, do come join together with us. We have a great time and we really look forward to connecting with you all.

Sheri Hinesh [00:20:42] Yes. Thank you, sir. Thank you so, much, Tom, for inviting us. The disruptors, the Rebels. And in final message, like Deborah said, find us supplychainrevolution.com. I have admired Tom’s work and his point of view for many years. And I salute you and your fabulous swagger. I love the hat. I love your brand. So, we’re we’re just really thrilled to find others. And I think right now the the opportunity is there are others out here like you and we can unite, especially across digital platforms, social platforms and really change the world. I think that sometimes people forget the impact that you can have in the world we share. And that’s really this message that we would hope you walk away from, that you can change the world.

Tom Raftery [00:21:36] Super, super, Sherri. Deborah, thanks a million for joining me on the show today.

Deborah Dull [00:21:43] Thanks, Tom.

Sheri Hinesh [00:21:43] Thank you.

Tom Raftery [00:21:46] OK, we’ve come to the end of the show. Thanks, everyone, for listening. If you’d like to know more about digital supply chains, head on over to SAP.com/digitalsupplychain or simply drop me an email to Tom Dot Raftery at SAP dot com. If you’d like to show, please don’t forget to subscribe to it in your podcast application to get new episodes right away as soon as they’re published. And also, please don’t forget to rate and review the podcast. It really does help new people to find show. Thanks. Catch you all next time.

 

And if you want to know more about any of SAP’s Digital Supply Chain solutions, head on over to www.sap.com/digitalsupplychain and if you liked this show, please don’t forget to rate and/or review it. It makes a big difference to help new people discover it. Thanks.

 

Three Industries Where Technology Is Reducing Our Carbon Footprint

 

The science is in. We need to significantly reduce our carbon emissions to limit the amount of warming our planet undergoes as a consequence of climate change.

The good news is, technology is rising up to meet this challenge. The bad news is it needs to do far more, and do it faster. How is technology helping? Well, if we check out some of the industries with the highest carbon footprint (energy, transportation, and agriculture), we can see some of the massive disruptions that are happening there, and how they are impacting emissions.

1 Energy

The energy sector is undergoing a massive transition globally from a system powered by centralised, thermal generation based often on fossil fuel combustion, to one increasingly powered by decentralised renewable sources. And while it would be great if this was happening for reasons of climate concern, it is, in fact, happening for reasons of economics, which is better because it means it is sustainable in the long term.

Why do I say it is because of economics? Because the cost of wind, solar, and lithium-ion battery storage are falling. Falling fast (due primarily to the experience curve). Since 2012 the cost of wind power has fallen 50%, solar power has fallen 80%, and battery storage has fallen 87%. It is now at the point where unsubsidised, combinations of wind and battery storage, or solar and battery storage are able to beat natural gas on price.

Don’t take my word for it. At the Wolfe Research 2019 Power & Gas Leader’s conference last month (October 2nd, 2019) Jim Robo, Chairman, and CEO of NextEra Energy the biggest and most successful utility in the US said

“We see renewables plus battery storage without incentives being cheaper than natural gas, and cheaper than existing coal and existing nuclear… And that is game-changing”

Then, when you consider the amount of time it takes to deploy a power plant, renewables win again.

IMG_0029

And consequently, the share of new power generation being deployed globally that is renewable is rising rapidly, while the share of new fossil fuel generation is falling fast.

IMG_0030

And it is not just the supply side of the equation that is changing. The demand side is changing rapidly as well.

More and more organisations are demanding that their energy provider only supply clean, renewably sourced electricity. In fact, RE100, “a global corporate leadership initiative bringing together influential businesses committed to 100% renewable electricity” counts at time of writing (November 2019) 212 of the world’s largest companies (including my own employer SAP) as members. All 212 companies are either sourcing all their electricity from renewable sources or have committed to doing so in the near future. Companies do this because it is good for business. Consumers feel better about purchasing goods if they know they were produced using renewable energy, and employees feel better about working for organisations committed to renewable energy.

 

2 Transportation

So the carbon intensity of electricity, one of the main carbon polluters is falling worldwide on a gCO2/kWh basis. What about one of the other big polluters I mentioned at the start, Transportation. Well, fortunately, electric grids the world over are embracing renewable energy, because transportation is now starting to use electricity as a fuel, instead of dino-juice!

Why is transportation going electric? Three main reasons:

  1. Increasing environmental awareness among consumers
  2. Regulations from regions, countries and local governments and
  3. Economics – the costs to operate an electric vehicle (EV) are significantly less than a fossil fuel one
Nissan Leaf charging
Photo credit Tom Raftery

Greta Thunberg has done an amazing job of raising awareness in younger generations particularly about the dangers of climate change, but even before she burst on the scene, the 2019 regulations governing NEVs (New Energy Vehicles) in China and the 2020 emissions regulations for vehicle manufacturers in the EU (as well as local ordinances by cities restricting access to older, more polluting vehicles and countries on the phase-out date for the sale of Internal Combustion Engined vehicles) meant that vehicle manufacturers have had no option but to get on board with the electrification of cars and increasingly other modes of transport as well.

At a time when global vehicle sales are falling, sales of EVs are taking off.

statistic_id270603_battery-electric-vehicles-in-use---worldwide-2012-2018

Volkswagen, who have had some *ahem* reputational issues recently, have decided to embrace the Winston Churchill mantra of never letting a crisis go to waste, and are going all-in on EVs. They plan to spend €60bn (yes billion with a “b”) by 2024 to switch to electric, hybrid and connected vehicles. They will introduce up to 75 all-electric models, around 60 hybrid vehicles and plan to sell 26 million all-electric vehicles as well as around 6 million hybrid vehicles by 2029.

Perhaps even more tellingly, Daimler recently announced that they are stopping their internal combustion engine development initiatives and focussing instead on electric vehicles. The reason this announcement is so game-changing is that Daimler owns Mercedes Benz and Karl Benz, the founder of Mercedes Benz received the patent for the world’s first production internal combustion engine vehicle in 1886. Now 133 years later Daimler has decided that the era of the internal combustion engine is over, and EVs are the future.

And it is not just cars, motorbikes are also going electric with announcements of electric bikes from all the major manufacturers including Vespa, Yamaha, Honda, all the way up to Harley Davidson.

Buses, trucks (from the large class 8 all the way down to delivery trucks), and refuse collection vehicles are also going electric. This is important not just for reducing their carbon emissions, but also because these vehicles often work primarily in urban centres so converting them from diesel to electric will improve air quality, reduce noise pollution, and significantly reduce the cost of operation for these machines.

FuelUseVehicleCategory

Also, when you take into account the fuel use by categories of vehicle, you can see from the chart above that class 8 trucks, buses, and refuse collection vehicles consume far more fuel than other vehicle categories. Fuel use is of course, not just a good proxy for their potential to pollute, but also for their running costs so the economic case to shift these to electric is very strong. In the case of buses, battery-electric buses cost 20c per mile to operate over their lifetime, whereas diesel buses cost 75c and so, battery-electric buses will dominate the market by the late 2020s.

And it doesn’t stop there. Construction equipment is going electric. Ships are going electric. Even planes are going electric. Global consultancy firm Roland Berger is currently tracking 170 different electric plane initiatives (about 50% are in the urban air taxi space). While the Johan Lundgren, CEO of easyJet has said that:

easyJet is collaborating with US company Wright Electric to support their goal for short-haul flights to be operated by all-electric planes within 10 years

It is hard to think of a mode of transportation that is not moving towards electric drivetrains. And as we saw above in the section on energy, as our grids are getting cleaner daily, shifting transportation to electricity quickly drops transportation’s carbon footprint too (as well as reducing noise pollution, and cleaning up our air quality).

3 Food Production

Food production is the third industry where technology is about to play a huge part in reducing our carbon footprint. Agriculture globally accounts for about 13 percent of total global emissions. That makes the agricultural sector the world’s second-largest emitter, after the energy sector. And this doesn’t include emissions associated with deforestation to clear land for more agriculture.

However, shifting away from our current practices of food production to one where our plant food is grown in massive indoor vertical farms has the potential to significantly clean up agriculture’s environmental toll.

Indoor vertical farms use 95% less water and 99% less land than conventional farming practices. They use no soil, require no herbicides or pesticides and they can produce food in the middle of cities, thereby reducing drastically the crop’s food miles. When you are producing food so close to the point of consumption, you no longer need to optimise your produce for shelf-life, and you can instead choose to optimise for taste, and/or nutrition.

Then there is the clean meat movement. Clean meat is meat that is produced from either cultivating animal cells (without having to slaughter the animal), or by converting plant protein to take on the taste and consistency of animal protein as companies such as Beyond Meat and Impossible Foods are doing so successfully.

Our current means of producing plant food and meats are vastly inefficient and have a huge carbon footprint. This won’t scale to feed the population of 9-10 billion inhabitants that we are projected to reach in the coming decades, especially as the middle classes grow in the developing world and their meat consumption expectations grow too.

Converting to a system where we produce plants in massive vertical farms, and then using that plant food to create clean meat solves a lot of the problems associated with agriculture today such as the unconscionable cruelty we visit on the animals we breed for slaughter, the vast amounts of antibiotics that are used in agriculture leading to the development of multi-drug resistant superbugs, and agriculture’s massive carbon footprint.

Zebra
Zebra in Pilansberg reserve – photo credit Tom Raftery

If we return the land we have stolen from nature for agriculture back to the wild we can restore the enormous losses we have seen in recent decades in biodiversity, create a huge new ecotourism industry, and through reforestation sequester from the atmosphere much of the carbon we have emitted in the last century, mitigating the or possibly turning back the worst effects of climate change.

As the United Nations COP25 Climate Change Conference kicks off in Madrid, it is important to remember that although the situation with the climate is indeed dire, there are solutions. We just need to embrace them. Quickly.

This piece was originally posted on my Forbes blog

Internet of Things, renewables and storage – a perfect storm for utilities’ digital transformation

Without doubt it is a time of great turbulence in the electric utilities space.

In most regions globally, wind and solar are now our cheapest sources of electricity generation, even without subsidies.

As a consequence of this, wind has overtaken nuclear, hydro and coal to become the second largest source of electricity generation in EU in 2016 [PDF]. And at the same time in the US, the solar market is smashing records and grew 95% in 2016 alone.

Then there is storage. Costs here have been tumbling too. So much so that Morgan Stanley predicts the storage market to grow from the roughly $400m in 2016, to a market size of $2-4bn by 2020. This will have big implications for utilities’ ability to add more variable generators (renewables) to their mix without destabilising the grid.

Speaking of grid stabilisation, the refrain up until now has been that for every MW of renewables built, a MW of gas had to also be built as a backstop (for days with no wind, or overcast days, or nights). However, this too has changed. Last August First Solar ran a tests with CAISO (the California grid operator) to test a solar farm’s ability to smooth out grid fluctuations. The results of the test demonstrated that solar farms are able to meet, and sometimes exceed, the frequency regulation response usually provided by natural-gas-fired peaker plants.

Things are changing on the consumption side of the house too.

solarinstall2016

Source: GTM Research / SEIA U.S. Solar Market Insight report

As can be seen from the chart above, installations of residential PV are rising, as is home storage, and another form of potential consumption and storage (v2g), the electric car, saw sales rise by 37% in the US in 2016.

Then there is the whole digitisation of the grid. Now all new equipment is being built with inbuilt ‘smarts’ and connectivity, and even older infrastructure can be retrofitted, so with the advent of the smart grid, we will finally have the possibility of the Electricity 2.0 vision I was talking up back in 2008/09. This is a smart grid where appliances in the commercial or residential worlds can ‘listen’ for pricing signals from the grid, and adjust their behaviour accordingly, taking in electricity when it is plentiful, and switching to alternative sources/lowering consumption when electricity is in high demand.

With the cost of generation dropping, with no end in sight, the cost of storage similarly falling, as I have posited previously, there is a strong possibility that utilities will have to switch to broadband-like ‘all-you-can-eat’ business models with the utilities differentiating, and making their revenue on added services.

Everything is changing for the electric utility industry – and so, against that backdrop, and the fact that I will be presenting on IoT and Utilities at the upcoming International SAP for Utilities Conference in Lisbon, I decided to have a chat with IDC Research Director Marcus Torchia, about the implications for utilities of these huge changes.

We had a great discussion, and many of the themes we touched on, I will be talking about at the Utilities event in Lisbon.

You can check out our chat in the video above, play it in the audio below, or listen to it on the IoT Heroes podcast site.

Will the price of oil ever increase again?

What is going on in the oil industry?

Graph of oil price from 2012 to 2016The price of oil has cratered. In 2012 it was over $120 a barrel. Today, 2016, it is at $42 a barrel, and this is an improvement from January and February of this year when it went under $30 a barrel.

Previously, when the price of oil fell, OPEC would meet, they’d agree to cut the output, and the constrained supply would ensure the price would rise once more. Why isn’t that happening now?

Most commentators are putting it down to the fact that Iran, who were under sanctions until very recently, understandably don’t want to cut production, and with Iran not cutting back, Saudi Arabia won’t either.

However, there’s another thesis which I think is more likely, and if true, oil prices will remain low for the foreseeable future. That thesis states that Saudi Arabia has realised that we are at the end of the Oil Age, and that a large percentage of the world’s fossil fuel resources will have to remain in the ground. With this in mind, it makes sense for Saudi Arabia to make sure they can extract, and monetise as much of their fossil fuel resources, as possible, while they still can.

What is the evidence for this?

First off, consider that last Friday 170+ countries signed the Paris Climate Accord whose aim to to limit global warming to 1.5-2C. Now that we have an upper limit on the temperature increase we are willing to accept, we also know how much CO2 we need to put into the atmosphere to achieve this amount of warming. It comes in at 1,100Gt CO2 [PDF] (1Gt = 1 gigaton = 1 billion tons).

On the other hand, the total proven reserves of the fossil fuel companies, and countries comes to 3,300Gt CO2. Notice the problem? 70-80% of the world’s proven reserves of fossil fuels will have to stay in the ground if we are to keep global warming below 2C.

Now Saudi Arabia has known about this issue for quite some time. As far back as the year 2000, Sheikh Yamani famously predicted that

Thirty years from now there will be a huge amount of oil – and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.

In fairness Sheikh Yamani’s reasoning didn’t have to do with climate change, but better drilling and exploration technologies, but still it has come to pass, and in this scenario Saudi Arabia has to race to produce as much oil as it can, no matter what the price, so as little Saudi oil as possible is left in the ground. Consequently Saudi Arabia is now producing somewhere between 10.3m-11m barrels per day – an historic high.

And then at last week’s OPEC meeting in Doha to try to stabilise oil production, Saudi Arabia scuppered the talks, ensuring no freezing of oil outputs. This has the added advantage of squeezing the other producers, few of whom can produce oil at the same low cost as Saudi Arabia.

total-cost-of-producing-oil

On the demand side, the International Energy Agency (IEA) has admitted that for 2016 global demand trends are not as positive as they were. The IEA is counting on demand from developing countries where India recently announced that it is going to install 100GW of solar by 2022 (in large part because solar is now cheaper in India than coal), while China is aiming to increase its installed solar by over 100GW by 2020.

And if news of the 400,000 orders for the Tesla Model 3 are anything to go by, there is no love amongst consumers for fossil fuel spewing vehicles.

Then yesterday comes the announcement that the Saudi cabinet approved a set of reforms aimed at moving the country away from its dependence on oil profits. They have seen the writing on the wall, and so while on the one hand they are going all out to maximise the amount of oil they can extract and sell, they are at the same time setting up a sovereign wealth fund of $2tn to ensure they, in the words of Deputy Crown Prince Mohammed bin Salman

can live without oil by 2020

So, with Saudi Arabia diversifying away from oil revenues, and unlikely to reduce output any time soon, there is no obvious reason why oil prices will ever rise again. And Sheikh Yamani’s prediction about a huge amount of oil being left in the ground will come to pass.

The future of electric utilities – change and disruption ahead

The utilities industry has typically been change averse, and often for good reasons, but with the technological advances of the past few years, the low carbon imperative, and pressure from customers, utilities are going to have to figure out how to disrupt their business, or they will themselves be disrupted.

I gave the opening keynote at this year’s SAP for Utilities event in Huntington Beach on the topic of the Convergence of IoT and Energy (see the video above). Interestingly, with no coordination beforehand, all the main speakers referred to the turmoil coming to the utilities sector, and each independently referenced Tesla and Uber as examples of tumultuous changes happening in other industries.

What are the main challenges facing the utilities industry?

As noted here previously, due to the Swanson effect, the cost of solar is falling all the time, with no end in sight. The result of this will be more and more distributed generation being added to the grid, which utilities will have to manage, and added to that, the utilities will have reduced income from electricity sales, as more and more people generate their own.

On top of that, with the recent launch of their PowerWall product, Tesla ensured that in-home energy storage is set to become a thing.

Battery technology is advancing at a dizzying pace, and as a consequence:

1) the cost of lithium ion batteries is dropping constantly Battery Cost

and

2) the energy density of the batteries is increasing all the time Li-Ion battery energy Density

(Charts courtesy of Prof Maarten Steinbuch, Director Graduate Program Automotive Systems, Eindhoven University of Technology)

With battery prices falling, solar prices falling, and battery energy density increasing, there is a very real likelihood that many people will opt to go “off-grid” or drastically reduce their electricity needs.

How will utility companies deal with this?

There are many possibilities, but, as we have noted here previously, an increased focus on by utilities on energy services seems like an obvious one. This is especially true now, given the vast quantities of data that smart meters are providing utility companies, and the fact that the Internet of Things (IoT) is ensuring that a growing number of our devices are smart and connected.

Further, with the cost of (solar) generation falling, I can foresee a time when utility companies move to the landline model. You pay a set amount per month for the connection, and your electricity is free after that. Given that, it is all the more imperative that utility companies figure out how to disrupt their own business, if only to find alternative revenue streams to ensure their survival.

So, who’s going to be the Uber of electricity?

What do we do in a world where energy is in abundance?

Swanson Effect

The cost of solar power is falling in direct relation to the amount of solar power modules being produced. With no end in sight to this price reduction, we should soon be in a world where energy is in abundance.

Solar PV Installed globally

Moore’s Law, the law that says the number of transistors in computers doubles every two years approximately, has an equivalent in solar power called Swanson’s Law. Swanson’s Law states that the price of solar panels tends to drop 20% for every doubling of cumulative shipped volume. This leads to a positive feedback loop of lower prices meaning more solar pv installed, leading to lower prices, and so on. And consequently, as the price of solar panels drops (see top graph), the amount of installed solar globally has increased exponentially (see chart on right).

This law has held true since 1977, and according to the Economist

technological developments that have been proved in the laboratory but have not yet moved into the factory mean Swanson’s law still has many years to run

This positive feedback loop is manifesting itself in China, where in May of this year the National Development and Reform Commission announced that China would target a more than tripling of its installed solar capacity to 70 gigawatts (GW) by 2017.

While in India, Prime Minister Narendra Modi and his cabinet recently approved increasing the country’s solar target fivefold to a goal of reaching 100GW by 2022.

To put those numbers in perspective, according to the International Energy Agency’s Snapshot of Global PV Markets 2014 report, the total amount of solar PV installed globally reached 177GW at the end of 2014.

And it is not just South East Asia, Brazil and the US this week reached a historic climate agreement that will require.

the US to triple its production of wind and solar power and other renewable energies. Brazil will need to double its production of clean energy. The figures do not include hydro power.

And according to GTM Research, by 2020 Europe will install 42GW and account for 31% of the global solar market.

Is this having a significant effect on pricing?

Absolutely it is. The price for installed solar hit another new low at the end of last year when Dubai utility DEWA awarded a contract to Riyadh-based consortium Acwa Power to build and operate a 200MW solar park for a guaranteed purchase price of 5.84US cents per kWh for 25 years.

To fully appreciate the significance of this price, it is necessary to understand that the price of natural gas – which generates 99% of the UAE’s electricity – stands at 9 cents. So, in the United Arab Emirates at least, solar power is currently 65% of the cost of the next cheapest form of electricity production. And its price will continue to decline for the foreseeable future.

So, solar power is cheap (in some cases 65% of the cost of the next nearest competitor), its price is continually dropping, and with 100’s of gigawatts of orders coming into the pipeline, the price reductions may even accelerate.

In this scenario we are headed into a world where solar power rates, for all intents and purposes, approach zero. In that situation, the question becomes, what do we do in a world where energy is in abundance?

Here comes the sun… IBM and solar forecasting


Concentrating solar power array

For decades now electricity grids have been architected in the same way with large centralised generation facilities pumping out electricity to large numbers of distributed consumers. Generation has been controlled, and predictable. This model is breaking down fast.

In the last decade we have seen a massive upsurge in the amount of renewable generation making its way onto the grid. Most of this new renewable generation is coming from wind and solar. Just last year (2013), almost a third of all newly added electricity generation in the US came from solar. That’s an unprecedented number which points to a rapid move away from the old order.

This raises big challenges for the grid operators and utilities. Now they are moving to a situation where generation is variable and not very predictable. And demand is also variable and only somewhat predictable. In a situation where supply and demand are both variable, grid stability can be an issue.

To counter this, a number of strategies are being looked at including demand response (managing the demand so it more closely mirrors the supply), storage (where excess generation is stored as heat, or potential energy, and released once generation drops and/or demand increases), and better forecasting of the generation from variable suppliers.

Some of the more successful work being done on forecasting generation from renewables is being undertaken by Dr Hendrik Hamann at IBM’s TJ Watson Research Center, in New York. Specifically Dr Hamann is looking at improving the accuracy of forecasting solar power generation. Solar is extremely complex to forecast because factors such as cloud cover, cloud opacity and wind have to be taken into account.
IBM Solar Forecaster
Dr Hamann uses a deep machine learning approach to tackle the many petabytes of big data generated by satellite images, ground observations, and solar databases. The results have been enviable apparently. According to Dr. Hamann, solar forecast accuracy using this approach is 50% more accurate than the next best forecasting model. And the same approach can be used to predict rainfall, surface temperature, and wind. In the case of wind, the forecast accuracy is 35% better than the next best model.

This is still very much a research project so there is no timeline yet on when (or even if) this will become a product, but if it does, I can see it being an extremely valuable tool for solar farm operators (to avoid fines for over-production, for example), for utilities to plan power purchases, and for grid management companies for grid stability purposes.

The fact that it is a cloud delivered (pun intended, sorry) solution would mean that if IBM brings it to market it will have a reduced cost and time to delivery, bringing it potentially within reach of smaller operators. And with the increase in the number of solar operators (140,000 individual solar installations in the U.S. in 2013) on the grid, highly accurate forecasting is becoming more important by the day.

(Cross-posted @ GreenMonk: the blog)

(Cross-posted @ GreenMonk: the blog)

SunSpec Alliance setting standards for the solar industry

BP Oil Spill
Photo credit Tom Raftery (Me!)

Sunspec.org is an alliance of renewable industry companies whose aim is to define communication standards data monitoring for the solar power industry.

Up until now there haven’t been any standards agreed around data communication in the solar power industry which added huge cost and complexity to the monitoring and management of solar farms – especially when there were multiple vendors involved. These lack of interoperability and increased cost issues have greatly hobbled solar power’s growth.

To address this the SunSpec Alliance was formed last year with the express purpose of defining standards which, if widely adopted, should significantly speed up the deployment of solar energy systems and be a big help in their management, reporting and maintenance.

On this coming May 11th, the Alliance will publish their initial set of proposed communication standards for the industry and open them up for public review and comment. The first specifications cover the inverter, the meter and the environmental sensors.

The release of these documents will be followed up by implementations of the specifications by Alliance member companies, testing, certification and a branding project to bring those products to market. Once these standards start to become widely adopted, they can be proposed to the IEC or the IEEE to become official international standards.

Standards are hugely important for the growth of any emerging industry. In the case of solar power, the standards will be all the more important, coinciding as they are with the with the arrival of smart grids and the development of smart grid interoperability standards.

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Is there really any need for baseload power?

No nuclear waste
Photo credit wonderferret

The electricity grid may not need “baseload” generation sources like coal and nuclear to backup the variability of supply from renewables.

Jon Wellinghof is the Chairman of the US Federal Energy Regulatory Commission (FERC). FERC is an independent agency that amongst other things, regulates the interstate transmission of electricity, natural gas, and oil – for more on FERC’s responsibilities see their About page. Chairman Wellinghoff has been involved in the energy industry for 30 years and appointed to the FERC as a commissioner by then president Bush in 2006.

Last year, shortly after being appointed as Chairman of the FERC, Mr Wellinghoff announced that:

No new nuclear or coal plants may ever be needed in the United States….

Wellinghoff said renewables like wind, solar and biomass will provide enough energy to meet baseload capacity and future energy demands. Nuclear and coal plants are too expensive, he added.

“I think baseload capacity is going to become an anachronism,” he said. “Baseload capacity really used to only mean in an economic dispatch, which you dispatch first, what would be the cheapest thing to do. Well, ultimately wind’s going to be the cheapest thing to do, so you’ll dispatch that first.”…

“What you have to do, is you have to be able to shape it,” he added. “And if you can shape wind and you can effectively get capacity available for you for all your loads.

“So if you can shape your renewables, you don’t need fossil fuel or nuclear plants to run all the time. And, in fact, most plants running all the time in your system are an impediment because they’re very inflexible. You can’t ramp up and ramp down a nuclear plant. And if you have instead the ability to ramp up and ramp down loads in ways that can shape the entire system, then the old concept of baseload becomes an anachronism.”

This was quite an unusual contention at the time (and still is) and despite the Chairman’s many years working in the sector it was, by and large, ignored – even by the administration who had appointed him to the Chairmanship. In fact, the Obama administration has since announced financial backing for new nuclear power plants.

However, a study published last week by the Maryland-based Institute for Energy and Environmental Research backs Chairman Wellinghoff’s assertion. In a study of North Carolina’s electricity needs it concluded backup generation requirements would be modest for a system based largely on solar and wind power, combined with efficiency, hydroelectric power, and other renewable sources like landfill gas:

“Even though the wind does not blow nor the sun shine all the time, careful management, readily available storage and other renewable sources, can produce nearly all the electricity North Carolinians consume,” explained Dr. John Blackburn, the study’s author. Dr. Blackburn is Professor Emeritus of Economics and former Chancellor at Duke University.

“Critics of renewable power point out that solar and wind sources are intermittent,” Dr. Blackburn continued. “The truth is that solar and wind are complementary in North Carolina. Wind speeds are usually higher at night than in the daytime. They also blow faster in winter than summer. Solar generation, on the other hand, takes place in the daytime. Sunlight is only half as strong in winter as in summertime. Drawing wind power from different areas — the coast, mountains, the sounds or the ocean — reduces variations in generation. Using wind and solar in tandem is even more reliable. Together, they can generate three-fourths of the state’s electricity. When hydroelectric and other renewable sources are added, the gap to be filled is surprisingly small. Only six percent of North Carolina’s electricity would have to come from conventional power plants or from other systems.”

With larger and more inter-connected electricity grids, the requirement for baseload falls even further because the greater the geographical spread of your grid, the greater the chances that the wind will be blowing or the sun shining in some parts of it.

So, is there really any need for baseload power any more, or is this now just a myth perpetuated by those with vested interests?

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